The chip shortage is visible on luxury cars

The lack of semiconductors, or chips in common language, has affected the production of cars and electronic items to such an extent that two luxury cars had to remove their automatic rearview mirrors from their upmarket models. These are Skoda Kushak and Volkswagen Taigun. This remarkable change has been done for all variants. So, even if people opt for the top-spec variant, they will have to fold the outer rearview mirrors of the car manually. The reason behind this sudden change is the global shortage of semiconductors born out of the Covid pandemic. When a Skoda Auto India sales, service and marketing official was asked on Twitter why this was done, his reply was that he hoped the supply issue would be resolved in the coming time. That is, Skoda can add this feature again in the coming months. The old brochure on the website has been updated. Automobile companies all over the world are facing problems due to lack of chips. This problem is also something special in front of big car companies in India. They are forced to reduce their production.
 
Since the problem of chip shortage is long lasting and there is no immediate solution in sight, Tata Motors has decided to manufacture the chips on its own. The company will set up an outsourced semiconductor assembly and testing plant for this purpose only. In such plants, silicon wafers are converted into chips. This plant can be set up in Tamil Nadu, Karnataka or Telangana, although at present the final decision will be taken only after getting the consent of the state governments. The Tata group can invest up to Rs 2200 crore for this purpose. The demand for new cars remains the same, but car companies are not able to supply cars. The condition is that interested buyers have to wait for the delivery of the vehicle of their choice. Semiconductor chip shortage is being cited as the biggest reason for this delay and uncertain supply. The second reason is the rise in raw material prices. Chip shortages have forced many car companies to reduce their production despite demand.
 
In the month of October last year, the wholesale sales of cars registered a decline of 27 per cent, which was 16.7 per cent lower than the pre-Covid, October 2019 sales. That is, less cars were sold than the number of cars sold during the Covid period. The situation was even worse in September last, when wholesale sales declined by 41.16 per cent year-on-year and nearly 26 per cent lower than in September 2019. According to Rajesh Mittal, director general of the Society of Indian Automobile Manufacturers (SIAM), an association of automobile companies, automakers were hoping that if there was less sales at the beginning of the current financial year, then the account would be leveled in the festive season. But it didn't happen. Chips typically made from silicon are used to supply power to a wide variety of devices such as cars, laptops, smartphones, home appliances and gaming consoles. The chip performs many functions, such as power display and data transfer, etc. Therefore, the effect of shortage of supply is bound to be there.
 
(Author is a senior journalist and columnist)