Volkswagen production ramp-up hinges on chip availability

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26 Aug, 2025 12:21

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Volkswagen’s Chakan factory near Pune will start the third shift for the first time in several years, but a lot will depend on the unhindered availability of semiconductors that have crippled the output of other carmakers.

Volkswagen has commenced the rollout of the Taigun SUV from the plant, which is part of the German auto giant’s Rs 7,900 crore India 2.0 programme. The SUV goes on sale by the second half of September and is the group’s first product under the VW brand and the second after the launch of the Skoda Kushaq a few weeks ago.

With a peak production capacity of 180,000 units a year, the Chakan plant is scheduled to start its third shift – meaning the plant will operate 24x7 – by November despite the uncertainty over the availability of semiconductors. Senior company officials said VW India depends completely on allotments of semiconductors by its German headquarters.

“Our allocations are made centrally in Germany and we have been assured of the quantities (of semiconductors) we require,” Gurpratap Boparai, managing director of Skoda Auto Volkswagen India, told Moneycontrol. “It is difficult to project the situation beyond a few weeks, but we have in-principle allocation that allows us to fulfil our plans. There will be disruptions because the global supply chains are so stretched that everything is flying around by air.”

In Europe, Volkswagen had halted production at some plants due to non-availability of semiconductors. The group operates 118 plants in 20 European countries. However, the company’s India operations have escaped such severity while preparing for the Taigun launch.

The Taigun is a mid-size SUV that will compete against the segment bestseller Hyundai Creta followed by Kia Seltos, the recently launched Mahindra XUV700 and the Skoda Kushaq.

“We have the overall chip availability perspective, which allows us to do the third shift. But we know how the situation is. If there is another lockdown somewhere else, then everybody is in trouble. But as of now we are on track for the third shift. These things are evolving every day,” Boparai added.

VW’s rivals

Market leader Maruti Suzuki is among several carmakers that have not escaped the heat of the chip supply disruption. Maruti’s parent Suzuki Motor Corporation kept its Gujarat plant shut due to the shortage of semiconductors for several  days. Mahindra & Mahindra, Renault, Ford and MG Motor are the other companies that cut production due to the chip shortage.

Tata Motors, Hyundai and Kia Motors have not reported any production shutdown so far due to the chip shortage. However, like the others, they too face a supply crunch, which carmakers admit will not be resolved for at least the remainder of FY22.

The crisis may worsen with the fresh wave of COVID-19 cases in southeast Asian countries including Taiwan and Malaysia, which house some of the production bases for the chips.