Microchip shortage – What is the update?
Car manufacturers across the globe have been facing a serious issue for quite some time now, the shortage of microchips. This shortage has affected production which has led to a drop in sales. All of this is coming together to cause a big loss to the industry as a whole. We had reported to you earlier that some cars had to be delayed due to this shortage in the country as well. However, that was a while ago and today we are back to check on the current situation of the microchip shortage. Also, we will look at how it has affected the customers. Let’s go.
What is the current situation?
Coming straight to the point, the microchip shortage has only worsened over the months. Carmakers in different countries have been facing this issue. Production has fallen down significantly. China, for instance, has seen a significant decrease in its car sales. A country like Germany is seeing a drop in the production of cars due to the shortage. Even Western automakers have been drastically hit. Many experts have hinted at this shortage running its course over a few more months before the supply and demand cycle smoothens. The shortage is a result of carmakers cancelling orders when the pandemic first hit. This was the same time when work from home was gaining popularity and there was a surge in demand for devices like laptops, computers, etc. With the orders from carmakers cancelled, most of them were shifted to sectors producing the aforementioned electronic devices. This led to a dried inventory of these chips. Now, with many countries slowly getting back on track, carmakers across the globe are finding it difficult to source these chips for themselves.
How has it affected customers?
As mentioned above, a shortage of microchips has affected the production of new vehicles. Also, with a low supply of microchips, the prices have soared. This has directly led to increasing in the input costs for carmakers. To manage the profits, they are now forced to increase the pricing of cars. This has led to the buyers shelling out more money. In some cases of foreign markets, dealers are even charging well over the supposed price for a new car. If we look at the Indian car market, most major brands including Mahindra, Maruti Suzuki, Tata, Toyota, Ford, Nissan, Renault, etc. have been forced to revise the pricing of their products. One such example is the Mahindra Thar which saw a hike of close to Rs 92,000 for some of its variants.
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