Volkswagen Braves Production Halts Amid Sustainability Shift

Over the last year, Volkswagen’s (VW) Mexican arm has reported significant progress in its transition to renewable energy and the optimization of production processes to achieve higher environmental standards. Halts in automotive production could indicate future challenges for the German OEM but projections look toward a brighter future.

On the back of a high production level of electric vehicles (EVs) and the upcoming project to present the new e-Crafter for sale in Mexico as early as May 2022, VW has quickly become one of the most proactive automotive companies in the quest to reduce CO2 emissions. The company’s Way to Zero strategy is set to “work toward a zero-emissions future [and] involves the way the company manufactures its products and conducts its processes,” said Edgar Estrada, General Manager, VW Mexico, in an interview with MBN. On March 10, VW Mexico reported that its production levels rose to 1.6 million vehicles and 1.3 million engines with the use of renewably sourced electricity.

VW is not new to implementing more sustainable technologies to optimize its processes. Since 2017, more than 70 percent of the energy used in its overall production came from wind turbines. Although the company’s Mexican headquarters are based in Puebla, the wind energy plant that enabled this is located in Zacatecas and has been operating for almost five years. At the same time, the automotive manufacturer is persistent in electrifying its product portfolio. VW’s iconic Combi is reported to make a comeback as a zero-emissions vehicle in 2024 and the e-Crafter is set to hit the market soon, albeit with a limited production of 300 units.

Nevertheless, the company is far from being immune to the international upheaval in the automotive supply chain, as its participation in the Mexican market in Feb. 2022 decreased by 2.5 percent in comparison to Feb. 2021. “Volkswagen has been one of the most affected brands due to a lack of inventory,” said Guillermo Rosales, Executive President, AMDA, during an interview with Bloomberg. This issue has its roots in a shortage of micro-components and semiconductors, which in turn has led to a decrease in sales by 16 percent so far this year. The global semiconductor shortage has affected all automakers, such as Toyota, which has been forced to lower or fully suspend some production lines for at least three months, as reported by MBN.

“This year, we are seeing more availability […] we have more potential for sales and we are looking for the improvement of the semiconductor supply,” Luis Rojas, Director, Volkswagen Commercial Vehicles, said in an interview with Forbes.