Autos & Transportation

Chip shortage to hit March production at Volvo Cars in China, U.S

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An employee at a Volvo car dealer, wearing a protective mask is seen in the showroom in Brussels, Belgium May 28, 2020. REUTERS/Yves Herman

STOCKHOLM, March 17 (Reuters) - Volvo Cars, which is owned by China’s Geely Holding, will temporarily stop or adjust production in China and the United States for parts of March due to a global shortage of semiconductor chips, it said on Wednesday.

"We expect the situation to become critical during the second quarter and have therefore decided to take measures to minimize the impact on production while working daily to improve the situation," Volvo Cars said in an e-mailed statement.

"Volvo Cars will temporarily stop or adjust production in some of its car factories (in the United States and China) during the month of March," it said.

The Swedish firm said last month it had so far not lost volumes due to the chip shortage, but added there was a "big risk" it could happen during the first quarter.

The shortage has hit automakers globally and stems from a confluence of factors as carmakers compete with the consumer electronics industry for chip supplies.

Truckmaker Scania, part of Volkswagen AG's (VOWG_p.DE) commercial vehicle arm Traton SE (8TRA.DE), said earlier this month it might have to stop production due to the shortage.

Sweden’s AB Volvo (VOLVb.ST), a rival to Scania, said last month the shortage had hit production at its factory in Ghent, Belgium, and warned of further stoppages.

Reporting by Helena Soderpalm and Johan Ahlander. Editing by Mark Potter

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