Honda halts production in Japan and China amid ongoing chip crisis
Honda halts production in Japan and China amid ongoing chip crisis
- Honda Motor will stop production at several factories in Japan and China due to semiconductor shortages.
- The production halt is scheduled from late December to early January, affecting operations at domestic and joint venture plants.
- The ongoing supply chain disruptions are forcing Honda to revise sales forecasts downwards and cut operating profit estimates.
Story
In late December and early January, Honda Motor will suspend production at multiple factories in Japan and China. This action is a direct response to ongoing disruptions caused by a worldwide semiconductor shortage that has plagued the automotive industry throughout the year. The Japanese automaker announced that some domestic plants will halt operations on January 5 and 6, while all three plants of its joint venture, Guangqi Honda Automobile, in China will also cease production for five days starting December 29. This shutdown follows earlier production halts in Mexico during October and November, indicating a persistent global issue. Despite earlier forecasts indicating that production would stabilize by late November, the latest information suggests that supply chain issues are far from resolved. Honda's decision to further restrict production is compounded by geopolitical tensions affecting chip supplies, particularly due to a dispute involving the Netherlands and China regarding a chipmaker's oversight. The ongoing limitations on semiconductor availability have forced delays and slowdowns in production across North America as well. Moreover, the impact of these shortages has forced Honda to revise its global sales forecast down from 3.62 million vehicles to 3.34 million. The company expects that the ongoing disruptions will result in a significant reduction in operating profit, estimating a loss of approximately ¥150 billion. This financial forecast indicates that the scale of the semiconductor shortage continues to escalate, with the possibility of even greater impacts on Honda's production capability in the future. As the automotive sector grapples with these challenges, Honda's shares fell by 1.5 percent in Tokyo following the announcement of the impending shutdowns. This situation highlights the fragility of supply chains in the current economic climate, with manufacturers now increasingly vulnerable to geopolitical tensions and semiconductor dependency, which could take time to resolve as the global market continues to adapt.
