Over the past one year, electronics parts have been consumed largely to make more hand-phones, gaming consoles and other handy gadgets to keep engaged – and entertained – six billion people stranded at home. That has cost carmakers, which need them to make a whole host of new-age features – tyre pressure gauges, rain-sensing wipers or parking sensors, to name just a few.
The situation is so acute that Ford India, which uses the Chennai base to also export cars, has been compelled to shut the plant for a week, said people aware of the developments. A three-day plant shutdown starting January 14 on account of Pongal holidays was extended by seven more days, and now the plant is expected to resume operations from January 23.
The impact so far has been evident only in Chennai, but even the production plans at Sanand, Gujarat, could be affected in February and March.
Ford India told vendors in a note that due to global supply shortage of parts, the operations will now resume Saturday.
“The impact of semiconductor shortage will continue through the quarter. The company is trying to streamline supplies but the global conditions are not helping. If the alternative source is not secured, the impact on production could be more than 50%,” said one of the several people aware of the development.
A Ford India spokesperson declined to share the specific numbers, but confirmed to ET that the plant shutdown in Chennai was an outcome of the lack of supplies of electronics parts.
According to industry sources, about a fifth of the production or 1-1.5 lakh is likely to be hit in Q1 of 2021 on account of semiconductor, container and steel shortages faced by the automotive ecosystem.
Gaurav Vangaal, associate director, IHS Markit, said that as a key export hub, India may not remain untouched by the global issues. The shortage will not remain limited to electronic control units (ECU) alone; other electronics vendors have already started facing supply issues.
“All carmakers in India are currently assessing the production impact. Mahindra has acknowledged the shortage, global major car makers like Volkswagen and others have spoken about shortage,” he said. “We have revised production downward by 50,000 units in Q1; we expect a similar impact in Q2. However, we expect India to regain.”
Due to the shortage, IHS Markit is holding back upward revision of production estimates despite very robust demand.
The shortage has emanated on account of a strong demand for consumer electronics around the world after the pandemic. Hoarding of chipsets in China on account of the 5 G rollout, and a spike in the demand for laptops, gaming consoles and other electronics products have triggered a severe shortage.