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By Trend

Amid a semiconductor shortage worldwide, the decision of European automakers to stop production in Russia, a 1.5-million-unit automobile market, would mean chips meant for Russia possibly getting diverted to other growing global markets, such as India, said industry experts.

The beneficiaries could be the Indian units of Kia, Hyundai Motor, Skoda, Volkswagen, Renault and luxury carmakers such as Mercedes-Benz. That would be good news for Indian buyers who are waiting to get the delivery of their cars and SUVs, some of which have a waiting period of up to 10 months as the shortage of semiconductors, a critical component in modern vehicles, has forced automakers to slash production.

The production disruption, amid strong demand for cars and SUVs, had caused an estimated revenue loss of around $5 billion (or about half a million vehicles) for the manufacturers in India last year. For Skoda, Russia is the secondlargest market, after Germany and bigger than the home market of Czech Republic, while for Kia and Hyundai, it is among the top five.

This means a sizeable chip availability if vehicle production and supplies get disrupted there, and a large portion of that may be diverted to emerging markets.

For Kia, Hyundai and Skoda, Russia is among the top five markets — which would mean a sizeable chip availability if production and supplies get disrupted there, and a large portion may be diverted to emerging markets. “The chips will have to be consumed, so they will be distributed to the other regions of the world,” said Venkatram Mamillapalle, managing director of Renault India. “However, it has a lead time, and the impact may not be seen immediately. If the situation persists till April, India too may be able to get a part share from the allocation meant for Russia.”

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