Industry leaders expect the impact of the semiconductor shortage to continue even in 2023 and expect greater localisation to overcome the challenge.
26 Aug 2021 | 2459 Views | By Sricharan R
The automotive industry, is quite literally, running out of chips. Assembly lines across the world slowed down as a result of the longer time required to procure these semiconductors. But the ordeal may not end any time soon and even 2022 may see some domino impact. However, localisation and collaboration ...
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The automotive industry, is quite literally, running out of chips. Assembly lines across the world slowed down as a result of the longer time required to procure these semiconductors. But the ordeal may not end any time soon and even 2022 may see some domino impact. However, localisation and collaboration may be the way out of this challenge. Well, that’s what industry leaders indicated at the 61st annual session of the apex auto component body, ACMA, on August 27.
The semiconductor issue might may even spill to 2023 for some parts according to Prashanth Doreswamy, Country Head - Continental India & MD – Continental Automotive. He said this at the special session and panel discussion: Living with Volatility - Survival, Revival & Growth at ACMA’s 61st annual session. “We were expecting things to be fine by the Q3 of this year. But, it is now different with the current situation,” the country head said. Pointing out reasons, he mentioned that the pandemic and work from home resulted in their increased demand for these chips in the non-automotive.
Sunil Kakkar, Chairperson SIAM Atmanirbhar Sourcing Group and Senior Executive Director, Maruti Suzuki India stated that collaboration may be an option to tackle the semiconductor and container shortage issues, “We have to work, engage, and collaborate to solve such issues. We can manage container shortages by collaborating with the logistics and suppliers, giving them advanced notice for the requirements through long and short-term contracts.”
Hemant Sikka, President, Farm & Equipment Sector, Mahindra & Mahindra stated that though the tractor industry was not affected by the semiconductor issue, the rest of the Group offerings were and localisation is key, “The time has now come for us to localise every supply chain. We cannot depend on other countries.”
Vipin Sondhi, Vice President, SIAM and MD & CEO, Ashok Leyland that such challenges offer important lessons, “Customer expectations and use of digital has been accelerated by Covid. Also, there are many lessons learnt during this period. We have to work with the government to solve issues like semiconductors and containers.”
The survival strategy
According to Ashok Taneja, MD and Chief Mentor, Shriram Pistons & Rings, IC engines will continue to co-exist with electric vehicles for a long time. At the same time this brings both “challenges and opportunities” to invest in conventional and electric mobility simultaneously. “We should not just look for survival, but also for revival and growth. We have to deal with the change towards EV and we are dealing with it,” he affirmed.
However apart from electrification, the push towards hybrid variants and alternative fuel like hydrogen is also gaining traction in the commercial vehicle space. Sondhi explained, “Buses at urban cities will be the frontrunners for electrification and this has started to happen. Intercity buses will use alternative fuels like LNG, Hydrogen etc. In LCV, electrification can be expected. In rural areas we still have to use diesel and other alternate sources like CNG. For M&HCV it will be LNG, Hydrogen based energy. We have no other option other than to work towards these.”
Sikka corroborated the view in the context of the tractor industry too and alternative fuel is a viable option for the segment now, “segment is some time away from electrification.”
Prashanth Doreswamy signed off outlining the evolution in the mobility industry, “While the future of cars is changing, we are moving away from standalone ECU to server based architecture. This may evolve further. We anticipated this well in advance and we are moving towards it.”