Daimler & Volkswagen Adopt New Strategies to Counter Global Chip Shortage

The global automotive industry has been hit particularly hard due to the shortage of semiconductor chips across the world, forcing the car manufacturers not only to announce delivery delays and but also to scale down production significantly.

The crisis that started due to supply chain issues and a surge in demand for consumer electricals during the Coronavirus pandemic is showing no signs of resolution any time soon. With the chip shortage being anticipated to last till 2023, automakers have been forced to improvise in order to get through this tough period.

In this regard, Daimler and Volkswagen, the German automotive manufacturers, have changed their production strategies to restore normal car production capacity and ensure timely deliveries.

Daimler, the Stuttgart-based automaker, has established a direct line of communication with the manufacturer of different semiconductor chips primarily based in Asia.

On the other hand, Volkswagen, the Berlin-based automaker, has entered into strategic partnerships with Asian semiconductor chip manufacturers to cater to its requirements.

Before the crisis started, automakers normally procured parts, including semiconductor chips, from renowned suppliers such as Bosch and Continental who used to buy them from chip makers further down the supply chain. However, Daimler and Volkswagen have changed this strategy and other automakers are expected to follow in their footsteps to come out of the crisis as soon as possible.

Last month, IHS Markit, a London-based global information provider, had predicted that the global auto industry will not recover from the semiconductor shortage crisis until Q2 of 2023.

Earlier this month, AutoForecast Solutions, a Pennsylvania-based provider of global automotive forecasting databases, had revealed that the global auto industry sold 10 million fewer units in the first 10 months of this year due to the chip shortage as compared to the same period last year.

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