If a once-in-a-century pandemic and a historic recession were not enough, India’s hard-pressed automobile sector has now run into yet another speed bump.
The usage of semiconductors in the auto industry has gone up globally in recent times due to several reasons. As the shortage of semiconductors expected to procrastinate in the next fiscal as well, leading automakers like Tata Motors, Honda, and Kia Motors are actively engaging with their supplier partners in order to carry on with stable production activities at their manufacturing plants in the country.
Semiconductors are silicon chips that serve to control and memory functions in products ranging from automobiles, computers, and cellphones to various other electronic items.
The usage of semiconductors in the auto industry has gone up globally in recent times with new models coming with more and more electronic features such as Bluetooth connectivity and driver-assist, navigation, and hybrid electric systems.
Industry experts feel that enhanced demand for automobiles in the last few months has put pressure on the global supply chains leading to a shortage.
When contacted, a Tata Motors spokesperson told PTI that some Covid-19 related challenges in the supply chain, including a global shortage of automotive embedded electronics, continue to impact the industry.
“Tata Motors is taking appropriate measures with all of its affected suppliers to mitigate the impact to production. These global industry challenges are likely to continue in FY22,” the spokesperson noted.
Honda Cars India Senior Vice-President and Director (Marketing and Sales) Rajesh Goel said the issue may lead to some production-related disruptions in the coming days.
“Yes, there is going to be an impact on our production volume in coming months due to the semiconductor-related parts shortage,” he noted.
The company in the meantime is engaging closely with its suppliers to assess the situation, Goel said.
“Depending on the supplies of a specific type of part which gets affected, some models will have more impact than others. We will respond by trying to adjust our production volume and replacing production models wherever possible to minimize the impact,” he added.
Kia Motors said it is closely monitoring the situation.
“We are aware of the auto industry’s potential supply disruption of select chips for automotive manufacturing. We are closely monitoring the situation and collaborating with our supplier partners to maintain stable production,” a company spokesperson said.
Toyota Kirloskar Motor (TKM) said it is currently working to confirm any possible impact. Earlier, this month, US auto major Ford had said that the global shortage of semiconductors will impact its production in India in the coming months. On Jan. 18, American automaker Ford said it will extend shutdown at its manufacturing plant in the southern Indian city of Chennai for seven more days due to a global shortage in the supply of semiconductors. The shutdown, which started on March 21, last year was originally planned to last only a few weeks. The company which has two factories in India—one in Tamil Nadu’s Chennai and the other in Sanand in Gujarat—expects the issue that is affecting the entire automotive industry to continue for at least the first half of 2021.
In December, due to the semiconductor shortage issue supplied by Bosch Ltd, homegrown auto major Mahindra & Mahindra had also stated it was expecting a reduction in production and sales volume at its automotive division and in its wholly-owned subsidiary in the last quarter of the current fiscal.
Bosch Ltd, a major supplier, had stated that its imports of micro-processors (semiconductors) have been hit following a global surge in demand from the consumer electronics industry.
Semiconductors or microprocessors are the chips that control critical commands such as releasing airbags, audio/video entertainment, navigation, collision detection system, and switching on air conditioning remotely.
The single reason for the sudden shortage of semiconductors is the disruption in global supply chains due to the coronavirus pandemic.
“Large automobile manufacturing nations such as China increased their auto production volumes much faster than expected, therefore raising the demand for more of such chips,” said Vahishta M. Unwalla, research analyst with credit agency firm CARE Ratings.
She further explained that while Covid-19 led to volatile forecasts and disruptions in the global supply chain and planning of semi-conductors, the demand from non-automotive sectors, like consumer electronics, escalated recently due to the rise of 5G connectivity. These reasons aside, the timing of the crisis is particularly damaging for the Indian auto sector.
The Indian auto sector had just about started to see some recovery after months of low demand, first due to the coronavirus lockdowns and then because of the pandemic-triggered economic crisis.
Not a single car was sold in India in April last year when the country was in lockdown, which nearly broke the backbone of the auto industry. Even after the lockdown was lifted, demand did not immediately pick up. It was only in the festive months of October and November when the industry finally saw sales rising.
Now, the shortage of microprocessors has put the sustainability of this recovery at risk.
Global Starvation for Chip-Set
Global chipset shortage has created panic among the world’s leading automakers, so much so that the companies have been forced to either halt or slow vehicle production.
At the moment, all top carmakers from Toyota to Volkswagen, Daimler and GM are reeling from this global shortage of semiconductors. Ford is cutting production of its highly profitable F-150 pickup trucks, whereas General Motors said it plans to temporarily shut work at three plants in North America as chip shortages halt production lines. If the ongoing global semiconductor shortage will continue for a few more months, it will hit the carmakers who are already under pressure from regulators to pump more resources into electric vehicles.
The nut that is not the end of the starvation, it’s not just the automotive industry that’s struggling to get enough semiconductors to build their products. AMD and Qualcomm, which is the top seller of chips in the world to most electronics firms, have noted that shortage in recent weeks. Sony is also facing a lot of challenges to get the PlayStation 5 console and blamed the chipset shortage as well.
Why is there a global semiconductor shortage?
Silicon chips are the backbone of the consumer electronics industry, but they are in short supply. Demand for these sophisticated chips has soared during the pandemic, as homebound consumers lapped up laptops, next-gen game consoles like the PlayStation 5 and Xbox Series X, smartphones, and TVs. When the Covid-19 was at its peak, carmakers slashed orders for the chip due to lower than expected sales. At the same time, chipmakers started diverting attention to meet the growing demand for chips used in the consumer technology space.
Automakers began warning of a semiconductor shortage sometime late last year after demand for vehicles picked up in many parts of the world following a shutdown of production plants due to the pandemic. However, the production has not been able to shift back to the requirements of the auto segment as quickly.
Experts, however, blame automakers and their lack of farsightedness and poor planning for the current situation. Global carmakers have been badly affected by the aftermaths of the Covid-19 pandemics, but this continuing critical shortage of semiconductors could potentially derail the chances of them recovering as fast as many had initially hoped for.
Japan’s major automakers have cut production at various factories due to the worsening global semiconductor shortage brought about as chipmakers struggle to meet soaring demand from consumer-electronics companies.
Lockdowns and travel restrictions are prompting housebound shoppers to snap up more phones, game consoles, smart TVs, and laptops, which in turn has fueled demand for the chips used in those devices. That means carmakers from Toyota Motor Corp. to Volkswagen AG are at risk of not getting enough parts to fuel a fledgling recovery in their own industry.
Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, said the chip shortage had caused a relatively big impact on China’s automobile industry from late December and may persist into the second quarter. He noted that some chipmakers have boosted their prices, so it’s hard to measure the impact in terms of vehicle-sales reductions. That’s forced automakers all around the world to cut back on production.
Japan’s Scenario
Toyota Motor Corp.
Toyota said on the morning of Jan. 15 it will halt four production lines at three plants in Japan’s Aichi prefecture due to parts shortages. The lines will resume operation for the afternoon shift, a spokeswoman for the company said.
Toyota said on Jan. 10 that it’s cutting production of its full-size pickup truck Tundra due to the global shortage of semiconductors. The company expects to trim output of its Tundra model manufactured in San Antonio by 40% this month as a result of limited chip supplies.
In China, Toyota halted lines at its factory in Guangzhou on Jan. 11 due to parts shortages. Toyota jointly operates the facility with Guangzhou Automobile Group Co.; the plant has produced upward of 300,000 vehicles annually in recent years, including the Camry. The lines resumed operation on the eve of Jan. 12 as the necessary parts were able to be procured, spokeswoman Shino Yamada said.
Honda Motor Co.
Honda is seeing the impact of chip shortage in China and is considering cutting production. “We will replace some models and adjust our work shifts when necessary,” a Honda spokesperson said on Jan. 13. On the same day, Honda again said it would stop production at Swindon from Jan. 18 due to supply issues, and aim to restart on Jan. 22.
In North America, Honda said this week it will reduce the production of the Accord, Civic, and Insight sedans, as well as the Odyssey minivan and Acura RDX, a crossover sports-utility vehicle. Honda will adjust production at its Marysville and East Liberty plants in Ohio, as well as at facilities in Alabama, Indiana, and Canada. Honda will cut output by a few thousand units by the end of January, and the adjustment will likely continue, according to the Nikkei, which earlier reported the decreases at Honda North America.
Honda was among the first global automaker to warn of chip shortages, announcing a two-day halt in output at its UK plant on Jan. 5 and 6. Established in 1985, the Swindon facility produces Civic hatchbacks and employed about 2,900 workers as of November. The plant is set to operate until July 2021, when it has been marked for closure, a decision that was announced in 2019.
Nissan Motor Co.
Production of the compact hatchback Note will be cut by about 8,000 units this month, part of a total output reduction that may exceed 10,000 vehicles, and last through March, Nikkan Kogyo reported on Jan. 15. A spokeswoman for Nissan declined to comment on specifics of the production cut.
Nissan said on Jan. 8 that it’s cutting back on production at one of its plants in Japan this month. “A global shortage of semiconductors has affected parts procurement in the auto sector,” spokeswoman Azusa Momose said. “As a result of this shortage, the Oppama plant in Japan will adjust production in January, reducing the production of the Nissan Note.”
Subaru Corp.
Subaru will cut output by a few thousand units each in January at factories in Japan and the US, a spokesperson said. “We are adjusting production of multiple models in our Gunma and US facilities due to chip-delivery delays,” the spokesperson said. “The adjustment started from Jan. 11 for Gunma and from Jan. 8 in the US. We are checking the end dates. Other companies are involved in the delivery delays, so our plan depends on them. The impact on output in February and beyond is unclear.”
Subaru is also shutting its main Gunma factory, together with Yajima and Oizumi plants, in Japan for two days starting Friday due to a chip shortage. The carmaker said it is assessing the impact on its fiscal 2020 earnings.
Suzuki Motor Corp.
There will be an impact on production, but the automaker is still checking details including which models may be impacted, a spokesman said.
Mitsubishi Motors Corp.
While Mitsubishi Motors is still checking regarding any impact on output, it hasn’t been forced to adjust its production for the time being due to chip shortages, a spokeswoman for the company said.
Mazda Motor Corp.
Mazda is currently examining whether there has been any impact on production, spokesman Naoto Mawatari said.
Semiconductors supply solution
Carmakers that have multiple component suppliers will be in a better position to face the current situation. So far, auto firms such as Maruti, Hyundai, and Tata Motors have claimed that the shortage hasn’t impacted their production.
Skoda’s India unit also said that it has remained unaffected due to the ongoing shortage. “As the shortage of semiconductors is expected to be addressed within the next four to six months, we are unaffected, (having) adequate stocks to last the restoration of supplies,” the company’s spokesperson said in December.
The post A Global Shortage of Semiconductors Has Affected Parts Procurement in The Auto Sector appeared first on ELE Times.
No comments:
Post a Comment