Slip of the Automobile Industry-Shortage of Semiconductors

Slip of the Automobile Industry- Shortage of Semiconductors

Image Source- Engineering Review

Recently, the automobile industry has been facing a decline in its revenue growth due to the shortage of semiconductors globally.

According to data recorded by the Society of India Automobile Manufacturers (Siam) & Mahindra, the overall automobile wholesales have declined by 11.4%, further putting the vehicle makers in a tight and complicated position, leading them to cut their productions.

Moreover, the collected record also represents a prediction of an excess decline in the supply of semiconductors in the global automobile industry in September.

Supplying Shortage in India Automobile Industry

In the recent statement of the director-general of Siam, it is stated that the Indian automobile industry is facing tremendous pressure on its overall production and distribution functions due to the challenges raised from the lack of proper supply.

The global shortage of semiconductors is now immensely impacting the output aspect of various Indian automobile companies.

However, the working members of the automobile industry, such as Siam and Mahindra, are trying hard to curb the problems enhanced from the semiconductor shortage by working efficiently hard enough to satisfy the customer’s demand in the competitive market.

Moreover, the automobile companies of India are also working hard to meet the expectation of customers towards safety.

But the shortage of semiconductors and other supply chain challenges, the commodity prices are getting higher, further increasing the overall production cost of the companies within the automobile industry.

Apart from this, the sales of record of various automobile companies such as Tata Motors, Maruti Suzuki, and Mahindra, the significant declining rate of wholesales.

The rising prices of products could be easily analysed, which further reflects the effect of the shortage of proper electronic components on the company’s overall functions and growth.

According to Tata Motors, the global and the domestic automobile industry are facing a huge shortage of semiconductors, which negatively impacts the production and distribution process of the companies within this industry.

Impact of Lockdown and Covid-19 pandemic on Automobile Industry

The supply situation of semiconductors and other electronic equipment is worsened due to the emergence of the Covid-19 pandemic and the lockdown of various countries, which hugely impacted the multi-pronged approach of the automobile industry.

The lockdown in east Asia has impacted the production and business objectives of various automobile companies globally, which later forced them to cut off the volume of their product in the competitive market.

However, many automobile companies also stated that they are currently working on mitigating the supply chain problems and would soon meet up with the expectations and satisfaction level of the customers in the competitive automobile market.

Moreover, many automobile companies are also developing and expanding their supply chain partners during the pandemic on social platforms to efficiently deal with the supply problem and further seek alternate options for the semiconductors and adopt a new technique such as trim mix to deal with the challenges.

Apart from this, the auto stock also slipped hugely after the release of the latest sales record of the automobile companies, which showed the decline of production and the rising price of the product in the market due to shortage of semiconductors, increasing competition from electric vehicles and rising cost of the inputs.

Thus, all these aspects reflect the ongoing storm on the automobile industry due to the high demand for automobile products in the competitive market with supply constraints in the meantime.

The overall position of the automobile industry is impacted by the challenges of supply, which negatively impacted the investors and stocks of the automobile companies.

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