Chip crunch forces carmakers to cut down on bells and whistles

The prolonged struggle to get semiconductors has made carmakers devise desperate countermeasures, including doing away with some non-essential features like wireless cell phone charging and others, in cars that are dependent on the chips.

German carmaker Volkswagen is the latest to join the bandwagon as it looks to improve production and bring down the waiting period on its models. Tata Motors and Mahindra & Mahindra (M&M) have either rolled out models devoid of certain creature comforts or are in the process of implementing the plan.

M&M is offering step-down variants of the newly launched, high-in-demand XUV700, to customers who feel discouraged to wait for the variant they had booked. For instance, the chip-dependent wireless mobile charging feature has been removed by M&M in the flagship SUV before being offered to the customer.

The stripped-down variants carry adjusted price based on the changes made to the variant. M&M, however, clarified that the customer is not forced to buy such variants and the decision to switch rests entirely on the buyer.

Chip-controlling features

A modern generation car could have as many as 200 chips controlling a variety of features including entertainment systems, airbags, GPS, route mapping, backup cameras, collision avoidance sensors and others such Advanced Driver Assistance System (ADAS). The fully loaded variant of the XUV700 comes with 170 chips, some of which power the ADAS.

The number of chips powering a vehicle depends on the level of technology employed by it. An electric car, thus, has a much higher number of chips than internal combustion engine cars.

Ashish Gupta, Brand Director, Volkswagen Passenger Cars India, said, “Yes we are thinking about it. Whenever we do it, we will do it in a way which suits our brand. It's not that VW will compromise on safety features. There are features which we can rationally explain to customers with a price proposition. Right now, the biggest bottleneck is the infotainment system.”

Volkswagen is reporting a waiting period of 3-4 months on the newly launched Taigun SUV because of shortage in chip availability. Its sister brand Skoda also has the Kushaq selling in the same segment. Being a competitor brand, VW has little headroom as there is the risk of the buyer switching to a rival brand. Unlike its competitors, VW India does not procure the chips on its own but depends entirely on its headquarters in Germany for the allotment for India.

With the XUV700 getting cumulative bookings of more than 70,000 units, M&M claims that consumer response for the SUV has made it the company’s best product rollout to date. As of mid-November, the Mumbai-based company had pending orders of 1,60,000 units, including bookings for the XUV700. During the September quarter, M&M lost total production of 32,000 vehicles owing to the chip shortage.

Based on the monthly volume numbers, Tata Motors has emerged as the winner in managing the chip crunch. The company has consistently upped production, including the launch of a new mini SUV Punch. The company also managed to bring down the use of chips per model by using different components thereby optimising the number of semiconductors.

COMMENT NOW