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The shortage of semi-conductor chips has affected the production and supply of all the auto manufacturers in the entire world. The Indian auto sector is not an exception to his. The waiting period for vehicles is increasing, and there is a substantial decline in their sales also. Moving ahead, following the government guidelines people are maintaining social distancing and prefer to travel in cabs or buy their personal car.

 

This has increased the demand for cars in India and other international markets. On the other side, as there was a lockout in all the countries the production activities affected the demand and supply of different products. The same happened with the production of semiconductor chips used in car manufacturing. The increasing demand for cars and decline in the supply of semiconductor chips has affected the production of cars. The lack of semiconductor chips has also affected the sales of car manufacturers and increased the waiting period for vehicles.

 

 

Interestingly, there are certain ways by which carmakers can cope with this problem. 

 

Remove The Components That Work on Semiconductor Chip: It is one of the best ways to cope with the problem to a certain extent. There are lots of features in a car that operate with the use of a semiconductor chip. Removing those features will decrease the dependence on a chip. Following this strategy, the carmakers can continue the production of their vehicles without increasing their waiting period and declining sales. The best example is the removal of the semi-digital instrument cluster from the mid-term trims of its premium hatchback Altroz. The domestic carmaker replaced the semi-digital instrument cluster with an analogue instrument cluster offered in the base trim. Following this strategy helped the company to retain the demand for its best selling vehicle without any difficulty. The same strategy is also followed by another domestic carmaker Mahindra & Mahindra. The carmaker has an ESC feature from the lower trims of the SUV300 and the 7th airbag from the top-end trim. This although has decreased the cost of the vehicle but has also given an option to the buyers.

 

Increase the Duration of Waiting Period: This strategy is followed by every car manufacturer. Determine the sale of every model according to its demand. There are certain models with a waiting period of more than a year. Now there would be hardly any customer who will wait to buy his favourite car after a year. During the same period, car manufacturers may introduce the upgraded version of that car. This strategy will help in fighting against the problem of chip shortage, as the buyers will prefer to buy a popular model rather than wait for a long time.

 

Produce Chips In The Country: This although is a good strategy, but time-consuming. According to reports most car manufacturers across the world have started developing chips for the components like a boot lid opener, driver door controls, parking sensors, etc. All these segments are important in a car that doesn’t require powerful chips to manage the functions of these components. Manufacturing their chips will reduce the dependence on third-party companies. Implementing this strategy will require a lot of time and labour, which at present is not possible for companies to manage. 

Conclusion: The problem of chip shortage doesn’t seem to be rectified immediately in the coming months, and manufacturers will need innovative ideas to find a concrete solution to this problem. It would be interesting to see how the manufacturers of cars in the Indian car market deal with it.