Auto output dives in Brazil, Mexico as chip shortages bite By Reuters

By Sharay Angulo and Alberto Alerigi

MEXICO CITY/SAO PAULO (Reuters) -Automotive production in Brazil and Mexico, Latin America’s two largest economies, plummeted in September, dragged down by an industry-wide semiconductor chip shortage and railroad blockades in Mexico, data showed on Wednesday.

Brazilian auto production was down 21.3% to 173,287 units in September from the same month in 2020, when the industry was scrambling to resume production from a coronavirus-induced shutdown, Brazilian automakers association Anfavea said.

In Mexico, auto output plunged 33.30% from September 2020 to 208,092 vehicles, while auto exports fell by 24.18% to 195,294 units, data from national statistics agency INEGI showed.

“All of this is due to the shortage of semiconductors, which at this point is affecting all levels of production for all participants in the domestic market,” said the head of the Mexican Automotive Industry Association (AMIA), Fausto Cuevas.

A semiconductor chip shortage is causing major auto production cuts around the globe and auto industry officials have warned the problem is getting worse.

In the latest fallout from the chip shortfall, Japanese automaker Nissan (OTC:) told Reuters it plans to carry out temporary stoppages at two Mexican plants for several days in October due to adjustments needed to manage the situation.

AMIA’s Cuevas forecast Mexican automotive exports would decline between 3.8% and 4.2% this year from 2020 and projected production to fall by between 4.7% and 5%, saying Mexico’s auto industry would only return to pre-pandemic levels in 2024.

A senior executive at Mexico’s Automobile Distributors Association (AMDA) said analysts were forecasting that supply and demand for semiconductor chips would be in balance around the second quarter of 2022.

Compounding carmakers’ woes in Mexico have been 86 days of railroad blockades as of Oct. 5 in the western state of Michoacan, home to the key port of Lazaro Cardenas, according to analysis by Grupo Financiero BASE.

Automakers in Brazil lowered projections for sales, output and exports this year, blaming a shortage of parts and a slow economic recovery.

Anfavea, which represents global carmakers such as General Motors (NYSE:), Volkswagen (DE:) and Fiat in Brazil, now expects sales of new automobiles in Brazil to either fall by 1% or rise by no more than 3% this year. In July, the association had forecast 13% sales growth from 2020.

Vehicle sales in Brazil fell 10.2% in September from August to 155,075 units, according to Anfavea. Still, automotive output in Brazil did rise 5.6% in September from August.