Own money has gone up
Pak Suzuki has suspended the booking of its Cultus automatic variant and Alto VXL and Kia Lucky has suspended its Picanto automatic variant over a shortage of semiconductor chips.
“It’s Suzuki and Kia at the moment but all companies will struggle with the issue in the coming months,” said an industry source. “There’s a global shortage of semiconductor chips. Pakistan is only feeling the heat a bit late.”
Almost all companies, be they Japanese, Korean or Chinese, have admitted that they have been facing a semiconductor chip shortage apart from other supply chain issues.
Toyota CEO Ali Asghar Jamali admitted that there is a problem but he said that they would not be suspending car bookings. “Booking won’t be suspended,” said Jamali. “We have issues but we are trying to manage it.”
According to Suzuki car dealers, the 1000cc Cultus and Alto VXL are facing a shortage of semiconductor chips. Pak Suzuki sells the highest number of cars, being the biggest player in Pakistan’s auto industry.
Meanwhile, Kia Lucky, which claims to have become the third biggest car seller in Pakistan, has also pulled the plug on its booking.
A company official confirmed to Samaa Money that the company has been affected by the chip shortage and they are trying to recover from it.
The supply chain snags and chip shortage have increased the delivery period of almost all cars. That has subsequently pushed own-money to a new highs.
A few cars have even been selling above Rs1 million than the actual company price.
Own-money is an illegal price an investor charges from a buyer, who wants to buy a car immediately. It is above a car’s actual price. It normally happens in Pakistan where car assemblers sometimes take months to deliver a car. It is known as the delivery period.
The delivery period has gone up from three months to over six months in some cases. And now companies are suspending bookings. For instance, Honda City’s automatic variant will be delivered in March next year if you book it now.
“If the semiconductor chip shortage persists, all companies will be affected,” said auto sector analyst Shakaib Khan. “All cars now have EFI (Electronic Fuel Injection) engines and ABS brakes and therefore all cars were dependent on semiconductor chips.”
Some cars are less dependent and some cars are more. A manual car may need fewer chips while automatic variants need more chips. “So, I think it is the reason that manual cars can still be booked while it’s the booking of automatic cars that have been suspended,” he added.
Auto analyst Usman Ansari said that the auto industry of other countries had already facing this issue when countries started to recover from the Covid-19 lockdowns.
“The issue in Pakistan came a bit late as compared to other countries. I think the reason for this delay was that Pakistan has low volumes (number of cars sold annually) as compared to other countries,” he explained.
The Covid-19 pandemic has been the reason for a supply chain snag for semiconductor chips for the auto industry. The companies manufacturing chips diverted their energies to catching up with demand coming from the tech industry, especially the segment manufacturing laptops, cell phones and webcams as people were restricted to working from home.
Meanwhile, chip factories also suspended operations during lockdowns, which was also a reason for the low supply.