witnessed a fall in vehicle production from 69.8% to just 6.8% in April this
year. The figures indicate the global shortage of semiconductors to be the
reason behind the slump.
The auto industry
in China was already taking a hit due to the shortage. Companies such as Volvo
and electric carmaker Nio have announced their plans to suspend or adjust
production due to the chip shortage.
sales in China increased by around 9% in April 2021 as compared to April 2020.
There is a pent-up demand for buying automotive and the low-interest rates are
an added incentive. But, the slow production of cars due to the global
semiconductor shortage will be a stumbling block for carmakers. Experts also
warned about its impact on exports. With no clear timeframe about when the
shortage will ease, the growth forecast remains rather muted.
In the automotive
industry, semiconductors or chips are widely used. Most cars usually have 100
to 1,000 chips in them. Chips are found in power steering, brake sensors,
parking cameras, infotainment units etc. Automakers will find it difficult
to complete the production of cars if these chips
remain short of supply.
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