SUBARU Corporation will cut production and Suzuki Motor Corporation is planning a partial shutdown of its factories as the global shortage of semiconductors continues to wreak havoc across the global car-manufacturing industry.

And it is not just chips that are the problem, with shortage showing up in rubber and aluminium products as well.

Global consulting firm AlixPartners, which has closely watched the chip shortage issue, said in a statement that car-makers will lose about $US110 billion ($A145b) in 2021 due to the shortage, almost double an earlier projection.

Subaru said last week that its plants at Gumna, north-west of Tokyo in central Honshu, will be idled from July 16 and blamed the slow supply of chips on the production slowdown.

It is the second time this year that the Gumna plants – which make Forester and Outback – have been forced to shut down (with lines slowed for two weeks in April as well), which affected exports to markets including Australia.

Hit by the same problem, Suzuki is preparing to cut production at two factories in Kosai and Sagara in Japan for two and seven days respectively.

According to Cox Automotive in the UK, car retailers will be locked into a strategy of “retaining profit margins at all cost” as it predicts vehicle supply issues continuing into 2022.

Philip Nothard, insight and strategy director at Cox, said limited supplies of key components – including semiconductors, aluminium, and rubber – will continue until the end of this year, causing new vehicle deliveries to be impacted in 2022.

The European Automobile Supplier Association (CLEPA) has reported this week that production of 500,000 cars has been delayed because of the semiconductor issue.

In its report, CLEPA president Thorsten Muschal said “while the second quarter of 2021 was very difficult, we still see manufacturing turmoil, including production delays and occasional stop-and-go situations”.

“The crisis isn’t over yet, but we think the worst is happening (now) and it’s unlikely that things will get worse.

“But the impact could be felt until 2022. The situation affects the entire automotive supply chain, as it also indirectly affects suppliers who do not use semiconductors in their product portfolio.”

CLEPA said that in Europe, inventory levels during the 60 days from production to vehicle launch are estimated to be “healthy” with average production disruptions having minimal impact on customer deliveries.

But CLEPA believes the supply problems may worsen towards 2022.

The European car industry gets up to 70 per cent of its chips through outsourced manufacturing facilities in Taiwan and China.

Taiwan Semiconductor Manufacturing said last month that it plans to increase production of microcontroller units by 60 per cent in 2021 to help relieve car manufacturers.

Europe has relatively strong automotive chip design capabilities, but it outsourced an estimated 50 per cent over the past decade, according to CLEPA, which “highlights the need to reassess dependencies”.

In response, Robert Bosch opened a €1billion ($A1.6b) chip plant in Germany on June 7 which is part of a push to double the European chip output.

The plant, which is regarded as a record investment by the company, is aimed at supplying future electronics for electric and self-driving cars.

It is seen as a more vital source of chips in the current environment of shortages and will increase Bosch’s ability to serve its OEM contracts directly and reduce reliance on third-party manufacturers.

However, analyst at Strategy Analytics, Asif Anwar, in an interview with Reuters, said the plant would not make any impact on the wider global chip shortage and would instead simply “help to insulate Bosch and its key customers”.

“But it is unlikely to serve as a gap filler to the current shortages being experienced in the automotive market,” he said.

The Bosch plant will start making chips for power tools in July with output of automotive chips to follow from September.

Tesla boss Elon Musk also waded into the debate this month, stating that the chip shortage was wreaking havoc on Tesla’s supply chain and blamed companies ordering more microcontrollers than they need, much like consumers hoarding toilet paper in the early days of the pandemic.

“Our biggest challenge is supply chain, especially microcontroller chips. Never seen anything like it,” he Tweeted.

“Fear of running out is causing every company to overorder on an epic scale.”

Mr Musk said the chip shortage was a “huge problem” and one of the most difficult supply chain challenges the company had ever experienced.

Tesla has been raising vehicle prices because of rising raw material costs and supply chain pressures.

It recently elected to remove a lumbar-support feature from the passenger seats of the Model 3 and Model Y which was seen as a way of saving money, however Mr Musk said this was related to limited customer usage.

Other carmakers have stripped out features such as navigation systems and blind-spot-monitoring mirrors due to the chip shortage.

By Neil Dowling