Several car companies say the chip crisis is easing

According to foreign media reports, the global semiconductor shortage that has plagued the auto industry for nearly two years is showing signs of easing, at least for now.

Automakers such as Mercedes-Benz, Daimler Trucks and BMW have now secured enough chips to run at full capacity after months of production challenges.The breakthrough came sooner than automakers expected, and it marksa bright spot in the historic transition toelectric vehicles in an industry battered by a deteriorating economy and inflation.

Manufacturers are cheering the improvement in chip supply, but they are not yet on the verge of winning.Joerg Burzer, head of production and supply chain management at Mercedes, said: "We are still monitoring week by week, but so far, basically globally, we have run our production without problems." He also said that although "Sometimes there are still supply problems, but compared to last year's situation, the problems are nothing."

Image credit: Mercedes Benz

Before that, manufacturers had to cutproductioneven as demand for cars was booming because factories around the world couldn't supply vehicles with enough critical chips as cars became more reliant on computers.The shutdown was so severe that global passenger car production showed little sign of returning to pre-pandemic levels.

Now, with automakers struggling to digest their backlogs as chip supply improves, the focus is turning to how to keep consumer demand afloat amid inflation and higher interest rates.

Tesla CEO Elon Musk said the company needed to cut 10% of its workforce because he had a "super bad feeling" about the economy, according to an internal memo.

However, not everyone is as pessimistic as Musk.Sentiment among German carmakers improved markedly in May, according to a survey by the Ifo Institute.Automakers are increasingly confident they will be able to raise vehicle prices in response to soaring raw material costs, the survey showed.

Karin Radstrom, head of the Mercedes brand at Daimler Trucks, said the company is now getting the chips it needs to address the backlog of orders."It's not perfect, but it's better than last year," he said in an interview. "I'm trying not to celebrate too soon, and we're still monitoring the situation closely."

BMW expressed similar optimism, saying that all factories were up and that the company had not experienced a shutdown due to chip supply."Currently, the situation has stabilized a little bit," a company spokesman said, adding that BMW was still monitoring chip supply on a daily basis and did not rule out disruptions in the coming weeks and months.

Volkswagen Group, like some other carmakers, estimates that the chip crisis will begin to ease in the second half of 2022.A Volkswagen Group spokesman said the company had also received a steady supply, but stressed that there was still a lot of uncertainty in the coming months.

Harry Wolters, president of Paccar's DAF truck division, sees the same trend."The current supply of parts is better than expected five or six weeks ago," he said. "So we've ramped up production rates in the U.S. and Europe."

But not all carmakers share this attitude, with Volvo Trucks saying that their supply of chips remains limited and that it expects production to be affected in the second quarter.Research by Susquehanna Financial Group also showed that chip delivery times did not shorten in May, suggesting that shortages persist.

Mercedes CEO Ola Kallenius said last year that the company would use a more expensive semiconductor to circumvent supply shortages.Ford Motor Company CEO Jim Farley also said last month that the company would buy any available chips on the open market.