When Supply Chains Break: Honda Halts Factories While Recalling 70,000 Cars

Honda will halt production at plants in Japan on January 5 and 6, and at all three of its Chinese joint venture facilities from December 29 through January 2. The same week, the company recalled 70,658 Acura ILX vehicles for brake master cylinder defects. Two separate crises reveal the same underlying problem. Complex supply chains are breaking down faster than companies can fix them.

The production halt stems from semiconductor shortages that were supposed to be over. Honda already cut its annual sales forecast from 3.62 million vehicles to 3.34 million units. The company previously suspended output at North American plants in October and November. The disruption traces to Nexperia, a Dutch chipmaker owned by Chinese company Wingtech. When the Dutch government seized control citing governance failures in October 2025, China blocked exports from Nexperia's Chinese facilities. While China granted exemptions in November, supply chain damage persists.

Nexperia makes unglamorous chips. Not cutting-edge processors but basic transistors and diodes for automotive control units. The chips that activate windshield wipers and open windows. Yet the company controls roughly 40% of the global automotive discrete semiconductor market. About 80% of its packaging and testing capacity sits in mainland China. When geopolitical tensions disrupted that flow, alternative sources proved inadequate.

The brake recall compounds Honda's operational challenges. Contaminated brake fluid in 2016 to 2020 Acura ILX models causes seals in the brake master cylinder to deform, leading to internal fluid leaks and reduced braking function. The ILX has been out of production since 2022, but dealers must now replace brake master cylinders free of charge. Owner notification letters will be mailed February 2026.

For US manufacturers, the chip crisis extends beyond Honda. Ford CEO Jim Farley called it a political issue requiring quick resolution to avoid fourth quarter production losses industrywide. GM CEO Mary Barra characterized it as an industry problem. The Alliance for Automotive Innovation warned that failure to resume chip shipments would disrupt global auto production with spillover effects into other industries.

The strategic failure happened years ago. When Wingtech acquired Nexperia in 2018, automakers ignored the risk of consolidating assembly capacity in China. Switching suppliers is not rapid. Replacement components require automotive-grade certification through lengthy homologation processes that cannot be compressed into weeks. Buffer inventories typically cover two to four weeks. After that, assembly lines stop.

Honda now faces simultaneous pressures. Production halts from geopolitical supply chain disruptions. Quality recalls from manufacturing defects in aging vehicle populations. Reduced sales forecasts as both problems compound. The company cut 280,000 vehicles from projections, costing roughly $150 billion in revenue.

For supply chain managers, the lesson is clear. Geopolitical risk is not an edge case. It is fundamental restructuring of how manufacturing operates. Concentrated supply in any single jurisdiction creates vulnerability that cannot be hedged with inventory or dual sourcing when both sources feed through the same chokepoint.

In a world of black swans and cascading disruptions, this is what resilience in action looks like.