Covid-19 effect on production of automobiles
Date: 02 April 2021 Tags: MiscellaneousIssue
Several automakers have requested potential customers to bear with a short waiting time for vehicle delivery citing production delays.
Background
Covid-19 proved to be a disaster for many industries including automobiles when the forced lockdown affected supply chain.
Details
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Waiting time for cars have become longest post-pandemic due to non-availability of critical parts such as semiconductor chips.
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Indian as well as global manufacturers have been forced to reduce their speed of production due to non-availability of these critical materials.
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Integrated circuits (IC) chip are commonly used component in cars, electronic goods, medical devices, and smart appliances.
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IC is made up of resistors, transistors, capacitors, which are placed on a single chip to perform a single or multiple functions.
Reason for shortages
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As the globe went towards lockdown, people started buying more electronic items such as computers, phones, video games etc to tide over boredom as well as work.
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As factories were shut, producers cut down on semiconductor chip manufacturing. This upset the balance between demand and supply, causing the current problems.
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The renewed demand has forced companies to adjust production and supplies to critical sectors such as automobiles.
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Cars makers usually do not have stock of chips and rely on dynamic supply chain based on demand from customers.
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With the demand for cars reduced during pandemic, automakers reduced their orders, forcing chipmakers to produce chips for other purposes.