Delivery Of Your Favorite Cars May Get Delayed As Automakers Face Supply Crunch Due To Chip Shortage

Chip shortages have harmed carmakers worldwide, as the consumer electronics industry is demanding more semiconductor supply.

(Representative Image/Getty)

New Delhi: You may have to face a delay in taking delivery of your favorite vehicles as leading Indian automobile manufacturers, including Tata Motors, Mahindra & Mahindra, and Tata Motors, are facing delays in production due to a global short supply of chips.

Anand Mahindra led Mahindra & Mahindra (M&M) has decided to observe 'No Production Days' of around a week in its Automotive Division plants in the month of September 2021, which is estimated to result in a reduction in production volumes of the automotive division in September 2021 by 20-25%, impacting its revenues and profits. 

"The Company's Automotive Division continues to face supply shortages of semiconductors, which has got further accentuated due to Covid lockdowns in some parts of the World. The company is taking various cost optimization measures to limit the impact. As the situation is dynamic, the company is carefully reviewing the supply situation, and all efforts are being made to minimize the impact.," said M&M in a regulatory filing.

However, the above event will have no material impact on the XUV7OO production ramp-up and launch plans. The date of commencement of XUV700 bookings will be announced soon. M&M's tractor operations, exports, trucks and buses business, and three-wheeler production are unaffected by the above disruption. 

The Mumbai-based automaker's move comes after the country's largest carmaker, Maruti Suzuki India, announced earlier this week that production at both of its plants would be impacted by 40% owing to chip shortages.

"Owing to a supply constraint of electronic components due to the semiconductor shortage situation, the company is expecting an adverse impact on vehicle production in the month of September in both Haryana and its contract manufacturing company, Suzuki Motor Gujarat Pvt. Ltd. (SMG), in Gujarat. Though the situation is quite dynamic, it is currently estimated that the total vehicle production volume across both locations could be around 40% of normal production," said Maruti Suzuki in a statement. 

After the announcement, M&M shares dipped over 2.3% in a firm Mumbai market on Thursday as the company posted a 15% dip in tractor sales and another 23% dip in car sales in August. 

Top Indian carmaker Maruti registered an 18% fall in sales, while Tata Motors sales plunged 7.2% on a month-on-month basis. 

"Semiconductor shortage continues to impact the auto industry globally. The recent lockdowns in East Asia have worsened the supply situation, and hence Tata Motors is forced to moderate production and offtake volumes in the coming months. The situation is fluid, and we will continue to work to mitigate the impact of this and aim to meet our customer orders through an agile, multi-pronged approach, including close engagement with our extended supply chain partners, procuring chipsets from the open market, using alternate chips and managing our model and trim mix," said Tata Motors. 

Global Crisis

Chip shortages have harmed carmakers worldwide, as the consumer electronics industry is demanding more semiconductor supply. Due to travel limitations, the COVID-19 pandemic resulted in an unforeseen increase in demand for smartphones and computers, resulting in an unprecedented global chip scarcity.

Due to a lack of semiconductors, Tesla temporarily suspended some operations at its Shanghai manufacturing last month. In August, a portion of the plant's production line was shut down for around four days.