Auto output dives in Brazil, Mexico as chip shortages bite

FILE PHOTO: Cars are seen in a traffic jam during morning rush hour in a period of social isolation in Brasilia, amid the coronavirus disease (COVID-19) outbreak, Brazil April 16, 2020. REUTERS/Ueslei Marcelino

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.

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

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, Volkswagen 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.

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