Chip shortage doesn’t dent automakers’ festive spirit

The festive season, which began with Onam, culminates with Deepavali celebrations in November. Automakers have witnessed robust demand so far and are now looking to spruce up supplies to dealers in order to serve customers during the peak of festive period in October.

"At the moment demand looks ok. It is slightly better than last year. If we look at the bookings, enquiries, retails, these are robust. On the supply side of course we may have some adverse effects, we are monitoring that," said Shashank Srivastava, Senior ED, Maruti Suzuki India (MSI).

The company would intend to build sufficient inventory before Navaratras to serve the spike in demand, but of course it all depends on the semiconductor supply situation, he added.

MSI's current inventory level is around 23-24 days while the appropriate level would be 30 days, Srivastava noted.

It is going to be a difficult task for the company as it has already announced that its vehicle production in September would be just 40 per cent of the normal output due to the semiconductor shortage.

Srivastava noted the sales this year were expected to be better than last year's but these were still behind the peak years of 2017-19. “While we compare with last year, it looks positive this year. But when you compare it to the peak of 2017-19, then we are still 22-23 per cent off that peak so I think we would have to be very careful in saying whether the market situation is better. It looks better than last year but when you compare it with the peak in 2017-19, we are way off.” Toyota Kirloskar Motor Associate General Manager (AGM), Sales and Strategic Marketing V Wiseline Sigamani said the uptick in demand would possibly continue for the coming festive season across the country due to factors like economic recovery, personal mobility requirements and new launches in the market.

Mahindra & Mahindra Automotive Division CEO Veejay Nakra said the opening up of the markets post the second wave of COVID-19 has led to a rebound in overall demand and the early signs indicate a good festive season with strong demand compared to last year.

"Utility vehicles will continue to dominate the space of festive demand contributing to almost half of the PV segment," he said.

Given the steep increase in overall input costs, especially due to the continuing rise in commodity price, M&M has taken calculated price hikes and taken necessary steps to reduce costs. "Further, the semiconductor shortage continues to be a global issue. This is leading to increased waiting periods across our brands,” he added.