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Sunday, October 17, 2021

Chip shortage offsets strong demand: Car sales in slow lane

While Maruti Suzuki India posted a 57 per cent year-on-year decline in domestic wholesale dispatches at 63,111 units in September, Hyundai Motor India Limited, too, saw a 34 per cent dip in sales in September at 33,087 units.

By: ENS Economic Bureau | New Delhi |
October 2, 2021 3:31:22 am
Maruti Suzuki plant in Manesar. The company posted a 57% decline in domestic wholesale dispatches in September. (File photo)

Despite strong demand, shortage of electronic components continued to hurt car sales in September as leading automobile manufacturers witnessed a decline in sales in September. Industry insiders said if the chip shortage issue continues, it will hurt their sales prospect in the forthcoming festive season.

While Maruti Suzuki India posted a 57 per cent year-on-year decline in domestic wholesale dispatches at 63,111 units in September, Hyundai Motor India Limited, too, saw a 34 per cent dip in sales in September at 33,087 units. Even Mahindra & Mahindra and Honda Cars India posted a fall in year-on-year sales of 11.6 per cent and 33.7 per cent respectively.

Among the leading players, Tata Motors bucked the trend as it announced growth of 21.4 per cent with sales of 25,730 units in September, which included 1,078 units of electric vehicles.

While Maruti had witnessed sales of 1,47,912 units in September 2020, the number dipped sharply last month as production was hit by chip shortage. “Sales volume of the company in September 2021 was adversely impacted due to shortage of electronic components,” the company said in its statement.

Even Hyundai Motor said that the “global semi-conductor supply constraint has adversely affected the vehicle production resulting in low dispatches in the month of September.”

Industry players say that demand has not been an issue and they are constrained on the supply side. Rajesh Goel, director, marketing and sales at Honda Cars said, “On demand side, there is good momentum in the market with improved buying sentiment. However, the supply chain hurdles including the widespread chip shortage has been a big challenge right now for the industry.”

As pace of vaccinations improved and economy has been reviving and witnessing growth in demand across sectors, industry sources say that the forthcoming festive season could have been led to growth for the sector but for the constraints on the supply of electronic components.

“Looking ahead, the demand for cars and SUVs is expected to remain strong in the forthcoming festive season; however, the supply situation for electronic components may continue to witness challenging times,” said Shailesh Chandra, president, passenger vehicles business unit, Tata Motors.

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