September 27, 2021

The World Live Breaking News Coverage & Updates IN ENGLISH

The World Live Breaking News Coverage & Updates IN ENGLISH

Chip shortage puts auto sales in India in slow gear during August

4 min read
, Chip shortage puts auto sales in India in slow gear during August, The World Live Breaking News Coverage & Updates IN ENGLISH
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, Chip shortage puts auto sales in India in slow gear during August, The World Live Breaking News Coverage & Updates IN ENGLISH

Factory dispatch of automobile, a key indicator of country’s economic scenario sales in the (PV) segment in India, took a beating in August 2021. Carmakers have been grappling with the ongoing global shortage, which has compelled companies to cut production due to unavailability of electronic chips.

“While we registered a growth of 17 per cent in the Passenger Vehicles segment, over same period last, supply of semiconductors continues to be a global issue for the auto industry and has been a major area of focus for us,” said Veejay Nakra, Chief Executive Officer, Automotive Division, at M&M.

The country’s largest carmaker Maruti Suzuki India Ltd reported a 19 per cent increase in total sales at 130,699 units in August 2021, amid electronic components shortage. The company had sold 162,462 units in July.

Production of the company is expected to further decline in September as it has announced an upto 60 percent cut in production after factory of Bosch,- one of its largest chip supplier, shut down due to pandemic in Malayasia.

The entry-level duo of the Alto and S-Presso went home to 20,461 buyers while the pack of Wagon R, Swift, Baleno, Celerio, Ignis, Dzire and Tour S saw combined sales of 45,577 units – a notable 26.43 per cent year-on-year (YoY) decline compared to sales of 61,956 units in the same month last year.

“Sales volume of the company in August 2021 was affected due to electronic components shortage. The company took all possible measures to limit the adverse impact,” it said.

South Korean major Hyundai reported a growth of 2 per cent in domestic sales at 46, 866 units in August 2021. The carmaker had sold 45,809 units in the same period last year.

While Mumbai-based Tata Motors’ domestic sales were 28,018 units last month, registering a significant 51 per cent YoY growth over the 18,583 units sold in corresponding period last year, there’s a month-on-month drop of 7 per cent, owing particularly to the shortage. The company has cautioned severity in the coming months and said in a press statement, “The recent lockdowns in East Asia have worsened the supply situation and hence, Tata Motors is forced to moderate production and offtake volumes in the coming months.”

“The situation is fluid and we will continue to work to mitigate the impact of this and aim to meet our customer orders through an agile, multi-pronged approach including close engagement with our extended supply chain partners, procuring chip sets from the open market, using alternate chips and managing our model and trim mix,” it added.

The decline in sales comes during the beginning of festive season- the period when do bulk of their sales. Auto dealers said that the shortage may see sales to decline 30 per cent drop in sales during the upcoming festival season in case chip shortage persists. Generally, the festival season accounts for a third of yearly sales for most dealerships and dealers were betting on this period for recovery from the sales washout following the second wave.

Vinkesh Gulati, President, Federation of Automobiles Dealers Association, said dealerships will be looking at a maximum of 30-day inventory in the Diwali and Navratri season, where generally they carry a stock of 45-60 days. “Commitment from the OEMs has gone for a toss, where they began this month promising a certain number of vehicles and have ended this month stating that they will only be able to deliver 50-60 per cent of the initial number. This means that we are also unable to make straightforward commitments to our customers much to the detriment of our sales,” he said.

Sources said that industry lobby group SIAM has asked the Ministry of External Affairs to reach out diplomatically so that as and when plants reopen, Indian are prioritised. Other countries like the USA have also started negotiating with chipmakers in Taiwan and Korea to book slots for semiconductor supply.

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