Automobile sales skid on chip shortage; dealers stare at supply crunch

Maruti reported a 19% decline in total sales at 130,699 units in August, as against 162,462 units in the previous month

Vehicle sales took a beating in August as automobile makers cut production amid a worsening global chip shortage, the factory dispatch data showed on Wednesday. 

Maruti Suzuki India, the country’s largest carmaker, reported a 19 per cent decline in total sales at 130,699 units in August, as against 162,462 units in the previous month. The company has announced an up to 60 per cent cut in production this month after Bosch -- one of its largest chip suppliers -- shut down its factory in Malaysia owing to the pandemic.

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

Veejay Nakra, chief executive officer (automotive division) at M&M, said, “While we registered a growth rate of 17 per cent in the passenger vehicles segment over the same period last year, the supply of semiconductors continues to be a global issue for the industry and has been a major focus area for us.”

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

While Mumbai-based Tata Motors’ domestic sales were at 28,018 units last month, registering a 51 per cent year-on-growth (YoY) growth over the corresponding period last year, there was a month-on-month drop of 7 per cent, mainly because of the semiconductor shortage. The company said, “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.

Auto dealers said the semiconductor shortage may result in sales dropping by about 30 per cent during the upcoming festival season. Generally, the festival season accounts for a third of the yearly sales for most dealerships.

Vinkesh Gulati, president, Federation of Automobiles Dealers Association, said dealerships would be considering a maximum of 30-day inventory during the Diwali-Navratri season this time, as against the usual 45-60 days. “Commitment from the OEMs has gone for a toss. They began this month by promising a certain number of vehicles and have ended this month by 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,” he said.

Sources said the industry lobby group SIAM has asked the Ministry of External Affairs to reach out diplomatically so that as and when plants reopen, Indian automakers are prioritised.