The automotive industry across the world is suffering for a long time from the silicon chip shortage. As a control module used in any electronic or electromechanical control module utilises silicon chips, automotive manufacturers had to increase waiting times on vehicles. In worst-case scenarios, the manufacturers had to supply vehicles without infotainment systems or omit many features and offer discounts on the respective vehicle. The silicon shortage scenario is suspected of easing out soon thus reducing the waiting period for new cars.
As per the latest survey by ICRA (Investment Information and Credit Rating Agency of India Limited), the semiconductor chip shortage is on its way to easing out soon. The semiconductor chips used in passenger vehicle components require a much lower specification level as compared to the silicon chips used in other electronic components like personal computers and mobile phones. As the demand for silicon chips in personal computers and mobile phones rose manifold during the pandemic, but the automotive manufacturers ceased production operations all across the world, the silicon chip manufacturers began prioritising orders for advanced chips.
When the pandemic eased out and the automotive manufacturers began operations due to the high demand for advanced semiconductor chips, silicon chip manufacturers stacked low specification chip orders with a lower priority tag. This situation is now improving over the past few months.
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As per the feedback, more than forty one per cent of the component manufacturers claim the situation to have improved over the previous months. The passenger vehicle segment is struck the worst because manufacturers attempt to stuff their vehicles with all the bells and whistles to attract customers, but due to this silicon shortage, many features were struck off the equipment list. Indian passenger vehicles like the Mahindra XUV700 and Mahindra Thar have a waiting period of more than a year in many parts of the country. Even some international vehicles like the Toyota Land Cruiser is facing hardships as this vehicle fetches a waiting period of more than four years!
If a high priority control took time to be sourced, the vehicle had to spend more time on the assembly line or in the manufacturer's stockyard. As the situation is getting better, the waiting period on new cars will decrease in the upcoming future, and customers will be able to get their hands behind the wheel of their new vehicles with a lesser wait. Due to reducing the waiting period, automotive dealerships would be able to maintain a decent amount of inventory in their stockyards. This would also aid in fetching discounts at the dealership levels.
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