Prolonged waiting period due to chip crunch can harm demand: Maruti Suzuki

Longer waiting periods with semiconductor shortage affecting production can have a negative impact on car demand, although the supply constraints of chips have gradually improved over the last few months, according to a senior official of car market leader Maruti Suzuki India.

The company currently has a pending order of around 2.5 lakh units with demand in the market continuing to be buoyant, while its production was over 80 per cent of normal in November.

"The bookings show that the demand continues to be quite robust, both in terms of inquiries and the bookings, but now availability is an issue and waiting periods have gone up," Maruti Suzuki India Ltd (MSIL) Senior Executive Director (Marketing & Sales) Shashank Srivastava.

He further said, "So we are a little bit afraid that the longer waiting periods will affect the demand pattern and it can have a negative impact."

Depending on models and variants the waiting period can range from weeks to months in the domestic passenger vehicles market at present.

Srivastava, however, said there have not been booking cancellations as the company has been constantly communicating with its customers.

"Almost every customer is being contacted every week, explaining the situation of why there is a waiting, and when they are likely to get the vehicle. And most consumers, I'm happy to say, understand this and we are also very grateful that they have not cancelled that booking because of this waiting period," he added.

Besides, the company is trying its "best to increase the production as much as possible", in order to overcome the situation, he added.

Stating that the supply constraint due to semiconductor shortage has improved, Srivastava said, "If you look at the availability of electronic components, this is affecting the production since August and onwards. Situation is getting a little better -- September was 40 per cent of the planned production, October was 60 per cent, November was about 83-84 per cent and December, as we have stated it will be about 80 to 85 per cent".

While things are improving, he said when it will become normal is going to take some more time but it is difficult to predict because the global supply chain is involved.

It is not just Maruti or one vendor of Maruti but also other OEMs in the industry and not just India, but across the globe all OEMs are affected by this, he added.

Srivastava also said the current decline in sales is largely because of the supply issue and not a demand issue.

"There is an upswing in the market if you look at a longer period," said, adding in the Apil-November period this year the overall industry sales were around 19 lakh units as compared to 15 lakh units in the year-ago period, which is a growth of over 26 per cent.