The auto industry’s bruising year of back-to-back supply-chain snafus

Ford has paused production at three plants for the same reason. Between the two automakers, thousands of workers in Michigan and Kentucky are now collecting unemployment.

The automotive supply chain—a sprawling web of companies across the world—is in focus in a way it hasn’t been since the early 2020s, when a severe shortfall of semiconductor chips hobbled the industry. Auto executives routinely tout a lesson from that moment: Don’t rely too heavily on any one supplier. Now, supplies of multiple items are gummed up at the same time.

“The confluence of issues is once in a lifetime," said Sam Fiorani, an analyst with consulting firm AutoForecast Solutions. “We haven’t seen this happen before. The lessons learned from semiconductors should have prepared the manufacturers for some problems in the supply chain. But all these at once are unforeseen and very difficult to navigate."

All this is rattling an industry that has already been hampered by billions of dollars in tariff payments and a costly pivot away from electric vehicles. Last week, General Motors said the EV pullback would cost it $1.6 billion.

Stellantis unveiled a $13 billion U.S. investment plan that will help defray its tariff bill.

U.S. car sales are on pace this year to end slightly above the 15.9 million sold in 2024, according to S&P Global Mobility. Next year doesn’t look promising, however: Total production and sales are expected to dip, with tariffs weighing more on automakers and the average price of a vehicle remaining elevated, now around $50,000.

It wasn’t all gloom and doom at the start of the year. Many in the industry felt that President Trump’s tariffs wouldn’t be nearly as bad as expected. Then April came.

The White House imposed hefty tariffs—25% on imported vehicles and parts. Production stoppages ensued as executives hurried to crunch numbers and figure out which vehicles could be made and where.

The Trump administration has since eased the tariff burden, providing some relief for companies that meet standards set under a North American trade pact. It is only so much help, however. Industrywide, the cost exceeds $12 billion.

China, the main target of Trump’s global trade war, hasn’t made the carmaking business any easier. In retaliation for Trump’s tariffs, China strangled a vital supply of rare-earth minerals. Export restrictions forced automakers to find workarounds to keep making cars. Some weighed extreme measures, such as shipping made-in-America motors to China to have magnets installed, The Wall Street Journal reported at the time.

“The auto industry, long built on global supply chains, now finds itself at the mercy of a single nation’s industrial policy," said Michael Dunne, a longtime China automotive industry consultant, in a newsletter last week. “This is no longer just an automaker’s problem. It is a question of economic security, industrial survival, and strategic independence."

Three-alarm fire

In September, a three-alarm fire hit a New York aluminum plant, knocking production offline until early next year. The stoppage has disrupted manufacturing schedules of profitable Ford models and, now, pricey Jeep sport-utility vehicles. A spokesman for Jeep-maker Stellantis said it was a parts shortage that caused the shutdown of its Michigan factory but wouldn’t specify the particular part.

Eric Graham, president of the UAW local for the idled Jeep plant, said it is possible the factory will be offline longer because of the aluminum shortage.

Ford will extend a pause on assembly of highly profitable three-row SUVs, the Expedition and Lincoln Navigator, at Ford’s Kentucky Truck Plant through Oct. 26, according to a memo obtained by The Wall Street Journal. The plant also started trimming output of F-Series Super Duty trucks, some of which can cost more than $100,000, according to factory workers.

A Ford spokeswoman declined to comment on the automaker’s production moves. Ford has said it is working closely with Novelis, owner of the damaged aluminum plant, while also exploring “all possible alternatives to minimize any potential disruptions."

Banned shipments

At the same time, a strange, and ongoing, geopolitical dispute is causing more concern that car production around the world could be upended in a matter of weeks.

Nexperia, a Netherlands-based chip maker, stopped shipments this month after the Dutch government took control of the company from its Chinese owner.

China, where 80% of Nexperia’s products are processed before being delivered, banned the parent company from exporting out of the country. Nexperia said it was trying to obtain an exemption from the restrictions. European carmakers predicted they only had a few weeks of Nexperia chips on hand to use in production.

John Bozzella, chief executive of the Alliance for Automotive Innovation, the top U.S. car industry group, warned that the Nexperia situation could deteriorate quickly and affect the global economy.

“If the shipment of automotive chips doesn’t resume—quickly—it’s going to disrupt auto production in the U.S. and many other countries and have a spillover effect in other industries," Bozzella said. “It’s that significant."