Kia Faces Production Disruptions for New Sportage Model
[Asia Economy Reporter Ki-min Lee] Southeast Asian countries, including Malaysia, have reactivated emergency signals for vehicle semiconductor supply as they impose lockdowns to curb the spread of the COVID-19 Delta variant. Kia’s ambitious new model, the new Sportage, released after six years, is inevitably facing production disruptions due to semiconductor supply issues.
According to multiple industry insiders on the 22nd, the new Sportage, a compact sport utility vehicle (SUV) produced at Kia’s Gwangju Plant 2, is currently being manufactured at a level of 400 to 500 units per day, falling short of the daily target of 600 units. Despite the new Sportage, launched on the 20th, recording a sensational pre-order figure of 22,195 units, production adjustments have become unavoidable due to supply problems with front camera semiconductor components produced in Malaysia.
Malaysia, home to over 50 semiconductor factories operated by global semiconductor companies, has been under a shutdown since last month due to a surge in COVID-19 Delta variant infections and deaths. The lockdown remains in effect, prohibiting outings except for grocery shopping. An industry insider familiar with production said, "The ongoing shutdown of semiconductor factories in Malaysia has made parts supply difficult. If this situation prolongs, it will definitely affect vehicle deliveries."
As Malaysia’s indefinite lockdown continues, delivery backlogs for other vehicle models are expected to worsen. Not only the new Sportage but also semiconductors included in the 7-speed dual-clutch transmission control units (TCU) for the Seltos and airbag control units (ACU) for the Seltos are generally in short supply, causing increasing delays in vehicle deliveries.
Kia’s new Sorento currently has a maximum delivery waiting period of 24 weeks, which is over 4 weeks longer than last month, while the Seltos requires an 18-week wait, 8 weeks longer than last month. The K8, launched in April, also saw its delivery waiting period increase from 4?16 weeks last month to 20?24 weeks this month. Notably, Kia has yet to finalize plans for the launch of its first dedicated electric vehicle, the EV6, and its release this month remains uncertain. Consequently, Kia is reportedly adjusting production by using semiconductors compatible with some models while simultaneously securing additional semiconductor supplies.
Not only Kia but also global automakers are once again facing shutdown fears. Last year and in the first half of this year, COVID-19 caused wiring harness and semiconductor supply issues, leading automakers worldwide to experience shutdowns. A parts industry official stated, "We are securing quantities through various channels to prevent shutdowns caused by parts supply issues." When the semiconductor shortage occurred earlier this year, parts suppliers barely overcame the crisis by purchasing semiconductors on the black market at prices more than ten times the cost.
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