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Ford Supplier Visteon Says Chip Shortage Lawsuits Are Likely Coming

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The ongoing global semiconductor chip shortage has wreaked havoc on Ford’s production in recent weeks, forcing the automaker to cancel its summer shutdowns and idle most of its North American and European plants, leading to massive production cuts. Most recently, it was estimated that Ford’s production took a 45,500 vehicle hit last week alone, and neither government officials nor experts see the crisis ending anytime soon. Now, perhaps unsurprisingly, Ford supplier Visteon is warning that automakers may soon seek compensation for lost revenue stemming from the shortage, leading to potential chip shortage lawsuits.

Visteon, which supplies automakers with interior electronics components, said in its quarterly filing that the inability of semiconductor suppliers to deliver an adequate number of chips could wind up costing them in more ways than one.

“This has led certain customers to allege that the company [Visteon] has contributed to production reductions,” the company said. “As a result, these customers have communicated that they expect the company to absorb some of the financial impact of those reductions and are reserving their rights to claim damages arising from the supply shortages.”

Ford said this week that it expects the chip shortage to cost it as much as $2.5 billion in lost earnings this year and that it could lose up to 50 percent of its planned Q2 production. The automaker is still Visteon’s largest customer by far, accounting for 22 percent of the supplier’s revenue last year.

Regardless of the broken supply chain and the potential for forthcoming chip shortage lawsuits, Visteon still enjoyed a strong turnaround to start the year. After ending 2020 with a $35 million loss, the supplier reported a $16 million gain in net income in Q1 of 2021, and the company’s sales grew 16 percent to $746 million.

We’ll have more on the fallout of the chip shortage soon, so be sure and subscribe to Ford Authority for 24/7 Ford news coverage.

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Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comments

  1. Curtis

    I bought a 2020 F150 in December 2020. In mid-March 2021, with 4000 miles on it, when I started it to go home for lunch, it would barely run. I took it into the dealership and they discovered that “varmints” had eaten through the wiring harness (soy-based coating BTW – do a quick search on the problems with that). Since then it has been sitting at the dealership waiting for a wiring harness that is back ordered somewhere between “indefinitely” and the middle of June. I am considering filing a claim under our state’s lemon law statute. I have found my dealership, Ford Motor Company, and my insurance company to point fingers at each other while I get the privilege of paying for a truck that I cannot drive.

    On a potentially related topic, my truck never got more than 17 mpg versus the advertised 22 mpg. I will be interested to see if the truck gets better mileage with the new (someday) wiring harness. The truck set on a lot for at least 6 months, which makes me wonder if some of the wiring damage was done prior to my purchase.

    Reply
  2. Joel

    Will we the consumers who have been put in limbo for vacations and trips that needed super dutys trucks be compensated by ford.For their misleading us in delivery dates. For being delivered a 2021 after 2022 get delivered.

    Reply

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