Microchip supply continues to limit Turkish auto output

The microchip supply problem that is affecting many sectors globally has continued to reduce automotive output in Turkey, which has also continued to affect the sector’s steel demand.

Following some other major producers’ output cuts in the previous months, Bursa-based Oyak Renault, a joint venture between France’s Renault Group and Turkey’s Oyak – parent company of Turkey’s largest integrated steel producer Erdemir – said it decided to pause output for 14 days as of Oct. 18, due to the microchip shortage.

The company initially paused output for seven days, effective Oct. 18, and added another seven days effective Oct. 28.

Oyak Renault previously paused output at some departments for five days as of Sept. 20, for the second time in that month. Oyak Renault has 378,000 units/year of automobile production capacity and 920,000 units/year of motor production capacity.

Ongoing microchip shortages could continue to impact automotive output in Turkey in the coming months, as the global shortage is expected to continue into 2022, according to industry reports.

The IHS Markit light vehicle production forecast has been cut by 6.2% or 5.02 million units for 2021, and by 9.3% or 8.45 million units for 2022, to stand at 75.8 million units and 82.6 million units, respectively.

“For 2023, we have reduced the forecast by 1.05 million units or 1.1% to 92 million units; this is a frontloaded adjustment and from the second quarter output levels are expected to be able to accelerate as supply chains return to normal,” the IHS Markit said at its latest October automotive research report.

“If this is the case then strong pent-up demand and the pressure to rebuild stock levels is expected to support elevated levels of production in 2024 and 2025, with 2024 now forecast to hit 97.3 million units, up .2% compared to the previous forecast and 2025 forecast at 98.9 million units, an increase of 2.4%,” IHS Markit noted.

— Cenk Can