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Business & Finance

Kia and Hyundai delay deliveries in Pakistan as chip shortage takes toll

  • Hyundai Nishat CEO says logistic and operational challenges causing disruption
  • Global supply-chain issue could take months to resolve, says FT report
Updated 08 Jun 2021

A global chip shortage that has hit the consumer technology sector and disrupted the auto industry has made its way into Pakistan as well with various carmakers delaying delivery times.

At least two automakers, Hyundai Nishat and Kia Motors. have announced up to a six-month delay in deliveries of their vehicles, taking to social media to publish the news.

Global chip shortage might impact vehicle production in Pakistan

To address the public outcry, Chief Executive Officer (CEO) of Hyundai Nishat, Hasan Mansha, said last week that the failure to deliver vehicles is due to the logistic and operational challenges as well as the shortage of microchips.

“The microchip is an essential part of any vehicle and, without it, we cannot complete the production of Tucson that we have promised to deliver in perfect working order.”

Kia Motors also issued a similar statement, apologising to its customers for the delay in deliveries caused by the disruption in the global supply chain. While the company expected the situation to improve in the next couple of months, it promised to compensate the customers for the late delivery without going into specification. In its social media post, the company said the delay could be up to four to five months.

The microchip shortage has rocked the auto industry and consumer electronics worldwide. Earlier this week, Intel Corp’s CEO said in a virtual session that it could take several years for a global shortage of semiconductors to be resolved.

A report published by the Financial Times (FT) also said the chip shortage disrupting the car industry will last for at least another year, quoting one of the world’s largest electronics contract manufacturers.

The FT report cited a forecast from Flex, the world’s third-biggest such manufacturer, for a crisis that is forcing car and consumer electronics groups to re-examine their global supply chains.

Meanwhile, speaking at the Computex trade show in Taipei, Intel CEO Pat Gelsinger asserted that the work-and-study-from-home trend during the Covid-19 pandemic had led to a "cycle of explosive growth in semiconductors" that has placed a huge strain on global supply chains.

“But while the industry has taken steps to address near-term constraints it could still take a couple of years for the ecosystem to address shortages of foundry capacity, substrates and components,” Reuters quoted Pat as saying.

After microchip crisis, worldwide tire shortage set to jolt auto industry

Earlier, the CEO had told The Washington Post that the shortage could be over in a "couple of months and that Intel planned to start producing chips within six to nine months to address shortages at US car plants".

Back in Pakistan, Mansha noted that these factors have disrupted the entire production chain and therefore, the deliveries of Hyundai Tucson may face a delay of up to five months. A separate, but official statement from Hyundai also mentioned that the company is no longer accepting new bookings for the SUV.

“The auto industry is still recovering from the backlash of Covid-19. Due to this, the delivery of Tucson will be delayed by four to five months.”

He said that the company is trying its best to minimise the delay time.

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