Semiconductor Chip Shortage’s Impact On Pakistan Auto Industry

The lockdowns further slowed down the process of exporting the chips available to other countries and manufacturing semiconductor chip in the first place

Semiconductor Chip Shortage’s Impact On Pakistan Auto Industry

By Sulman Ali

In recent years, a number of new car companies, including MG, Hyundai, Kia, Changan and more, have entered the Pakistani market. However, the COVID-19 pandemic has seriously hindered the progress of these companies, especially the new entrants.

Although Original Equipment Manufacturers (OEMs) in Pakistan continued to launch their cars during the pandemic, the global effect of Covid-19 on the automotive industry started to show after a few months. One major setback the automotive sector in Pakistan and around the globe had to face was a shortage of semiconductor chips.

These chips saw an increase in demand during the coronavirus. Most of the influx in demand came from the Information Technology sector as more and more organizations opted for the work from home model. The lockdowns further slowed down the process of exporting the chips available to other countries and manufacturing semiconductor chips in the first place.

Shortage of Semiconductor Chip and Rumours

As maximum modes of transportation were utilized to move pandemic relief goods to immediate needs, container space shortages added to the problem. This shortage leads to delays and sky-high prices. As OEMs couldn’t deliver any cars without semiconductor chips, the lack of transportation modes and high demand for these chips affected the plans of car manufacturers to deliver cars on time.

This has caused a serious problem for OEMs and consumers in Pakistan, and has led to quite a few rumours as well. Some speculate that the companies facing a semiconductor chip shortage are still delivering cars to investors and other selective individuals. While the frustration is understood, the prior statement of cars being delivered to a select few individuals can only be labelled as a rumour; hence, calling OEMS a fraud is unfair because their hands are tied. 

Biggest Loss

The semiconductor shortage has had negative implications for OEMs resulting in financial losses; however, arguably, the biggest loss has been the loss of trust shown by customers. However, consumers should understand that it is never an ideal business solution for any OEM to not sell cars after investing huge money. The OEMs are also hoping for the crisis to end soon as it will make their lives a lot easier for both them and the consumers.

Any company operating at such a massive scale is always ready to face issues and provide solutions; however, the situation faced by OEMs in Pakistan is really unprecedented and of global nature. Unfortunately, there is still no date when the situation will get better, and this has caused further uncertainty among the consumers.

As of now, it seems that the crisis won’t end soon, and even when the situation eases, it still will take some time for the chip manufacturers to start shipping around the globe. We should all accept the fact that OEMs are facing a serious challenge, so there’s no use banging the doors of car dealers. Let us all hope that this time of uncertainty ends as soon as possible!

Originally published at Pak wheels