The situation of "lack of core" is alleviated? Volkswagen plans to restart the production line of its Mexican branch

Volkswagen suspended production in three Mexican divisions in early June due to global chip supply shortages and "other supply chain-related problems". However, as the chip shortage eased, Volkswagen announced on Sunday (27th local time) that it plans to resume production in the three sectors from this week and July.

"Mexico's Volkswagen is preparing to resume operations in its three manufacturing divisions," Volkswagen said in a statement on Sunday. This may be the latest industry development in which the shortage of chips has eased somewhat.

The surge in demand for electronic equipment during the outbreak and the rapid recovery of the car market led to a severe shortage of semiconductor chips in the first half of the year, leading carmakers including Volkswagen, General Motors, Ford and Toyota to slash production.

Volkswagen informed its US dealers in mid-May that global chip supply shortages and "other supply chain related problems" would lead to extended downtime at Volkswagen's large plant in (Puebla), Puebla, Mexico, and the Chattanooga (Chattanooga) assembly plant.

"Volkswagen has made great efforts to avoid additional shutdowns, but we still had to suspend production at the Puebla assembly plant in June and early July for more than three weeks, which will affect the production of Jetta's (Jetta), Tuguan and Taos models," Volkswagen wrote to dealers at the time.

Volkswagen said in its latest statement on Sunday that the market generally expected the supply of chips to improve in the second half of the year, but the company added that "the possibility of future adjustments (to production) cannot be ruled out." Volkswagen said Jetta, Taos and Tuguan models would start this week and resume production in batches in July.

Although chip delivery in May was the longest since tracking data in 2017, supply in some areas has begun to catch up with demand, according to Susquehanna Financial Group, a US trading broker. Executives of some chipmakers, such as Hock Tan, chief executive of Broadcom, warned against reading too much into the surge in delivery times.

UBS also argued last week that the worst may be over in terms of the negative impact of the global chip shortage on the auto industry. GM, Ford and Volkswagen all said the production outlook was improving as the supply of chips improved, according to an analyst at the company.

But at the same time, Intel CEO Pat Gelsinger recently said that the global chip shortage will not be alleviated until 2023.

"I don't think supply and demand in the chip industry will return to normal before 2023," Gelsinger said recently. He went on to say that things could still get worse before industries get better.