Ford India closes plant for a week, impact of lack of semiconductor
The auto industry around the world is struggling with a shortage of semiconductors and now India is not untouched by it either. Indian automobile manufacturers are also seeing its impact. According to reports, Ford India has planned to rollout almost half of the fixed units of its popular SUV Endeavor this quarter. The reason for this is not the reduction in demand, but lack of semiconductors.
In the past year, electronic components have been consumed extensively to create more smartphones, gaming consoles and other gadgets to engage and entertain the 6 billion people living at home. It is now suffering car companies who need large scale semiconductors to make new jamming features such as tire pressure gauges, rain-sensing wipers and parking sensors.
Ford India plant closed for a week
How serious the situation is can be gauged from the fact that, Ford India had to close its Chennai plant for a week. The company also uses this plant to export cars. The plant, which was closed for three days due to Pongal holidays, have now been extended to 7 days. It is expected to start functioning again from 23 January.
The impact of the shortage of semiconductors was seen only in Chennai so far, but Sanand’s production plan in Gujarat may also be affected in February and March. Ford India told vendors that due to lack of supply of parts globally, operations will now resume on Saturday.
People aware of the case said that the impact of the shortage of semiconductors will continue this quarter. The company is trying to streamline supply but global conditions are not helping. In such a situation the effect on production can be more than 50%. A spokesperson for Ford India refused to share the specific numbers, but confirmed that the closure of the plant in Chennai was a result of lack of supply of electronics parts. According to industry sources, the automotive ecosystem is currently facing a shortage of semiconductor, container and steel, which is expected to account for about a fifth of production, or 1-1.5 lakh in the first quarter of 2021.
Companies changing production plan for the first quarter
Gaurav Vangal, Associate Director of IHS Market, said that as a major export hub, India cannot remain untouched by global issues. The shortage will not be limited to only electronic control units (ECUs), other electronics vendors have already started experiencing problems with supplies.
He further said that- ‘All car manufacturers in India are facing this problem. Mahindra has also acknowledged this, along with Volkswagen and other global car maker companies have also talked about the shortage. We have reduced production to 50,000 units in the first quarter, and expect the problem to continue in the second quarter as well. However, we hope that India will soon achieve the same status as before.
Many companies are forced to close the factory globally
Global carmakers such as Volkswagen, Nissan Motor Company Limited, Honda Cars India and Fiat Chrysler Automobiles are already forced to close factories around the world. This decrease has occurred due to the strong demand for consumer electronics worldwide after the epidemic. The 5G rollout has led to a huge reduction in demand for chipsets, laptops, gaming consoles and other electronics products in China.
