Semiconductor shortages gives car industry the jitters ahead of festivals – Times of India

NEW DELHI: The semiconductor shortage has come to haunt the Indian car industry ahead of the festive season as companies report subdued, and even lower deliveries to dealerships in August, compared to what they dispatched in the same month last year.
The chip supply crunch has disrupted the production schedule of many companies such as Maruti Suzuki, Mahindra & Mahindra and Tata Motors, and companies have said that they are being forced to go slow on the shop floor despite healthy demand.
Maruti, the country’s top carmaker, reported a nine per cent decline in wholesale deliveries, which clearly brings out the troubles that companies have been facing. The company had recently said that it has a pending customer backlog of over 1.5 lakh cars, but chip shortage is hitting production.
“Owing to a supply constraint of electronic components due to the semiconductor shortage situation, the company is expecting an adverse impact on vehicle production in the month of September in both Haryana and its contract manufacturing company, Suzuki Motor Gujarat. Though the situation is quite dynamic, it is currently estimated that the total vehicle production volume across both locations could be around 40% of normal production,” Maruti has said.
Tata Motors had a growth of 51% in the month on a year-on-year basis, though the company has seen deliveries go down seven per cent on a month-on-month basis due to shortages. “Semiconductor shortage continues to impact the auto industry globally. 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 company said, adding that the situation remains 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.”
Tata Motors said to tackle the problem effectively, it is in close engagement with its extended supply chain partners, procuring chipsets from the open market, using alternate chips and managing model and trim mix.
Mahindra & Mahindra also complained of the issue, and said that supply of semiconductors continues to be a global issue for the auto industry.
On the two-wheeler side, healthy demand generation at the retail level remains tough, and thus supplies of companies such as Hero Moto and Honda 2Wheelers to dealerships were constrained. Hero’s sales were down 24%, while Honda’s numbers were less by 6%.