Global chip shortage has reached carmakers' production lines in Slovakia

The Covid-19 pandemic slashed car production by 11 percent last year. A look at more detailed car production statistics from 2020.

Read this story to learn more about:

How the global shortage of chips affects the carmakers in Slovakia.

What the outlook for the Slovak automotive industry is for 2021 and beyond.

What follows from the statistics of car production in Slovakia in 2020.

Three major automotive plants in Slovakia had to partly halt their production this year due to a global scarcity of chips. The Slovak arm of the German carmaker Volkswagen is the latest to have had the problem within the past few months.

The global shortage of semiconductors, absolutely essential components for every car that rolls off the production lines nowadays, is due to several reasons. The Covid-19 pandemic, which hit the Slovak automotive sector quite hard, is one. The Slovak Automotive Industry Association (ZAP) estimated that all four carmakers, whch alongside their suppliers constitute the main pillar of the Slovak economy, manufactured about 11 percent fewer cars than in their record year of 2019.

“The main reason was the spread of Covid and the subsequent closure of stores and production shutdowns,” Ján Pribula, ZAP secretary general, told The Slovak Spectator. If just one supplier halts its production, the entire supply chain stops, he explained. “The months of March and April 2020 were really critical in this respect.”

Volkswagen Slovakia, Kia Motors Slovakia, Groupe PSA Slovakia, and Jaguar Land Rover together produced 985,000 vehicles in 2020, down from more than 1,100,000 units in 2019. The 11-percent drop, however, is lower than the 20 percent ZAP originally expected.

While the automotive sector recovered relatively quickly from the first pandemic wave in the spring of 2020, the prospects of the sector are mixed, which is currently suffering from the scarcity of semiconductors and the increasing prices on the side of suppliers.

“Regardless of the obstacles, 2021 will be better than 2020, both in terms of results and turnover,” Ján Čarný, general director of Coface for Slovakia and the Czech Republic, told The Slovak Spectator. “But it is clear that we will not reach the pre-crisis level; the number of cars produced in Slovakia this year will be not affected by demand, but particularly by the decision of groups on where they will allocate scarce chips.”

Čarný expects that the complications associated with the pandemic are likely to be straightened during the summer. Unless new coronavirus mutations with a high level of vaccine resistance appear, the second half of this year is expected to be "relatively normal."