Business

Chip scarcity to pull down festive gross sales, dispatches to fall by over a fourth in October

Consumers ready to drive dwelling their dream vehicles and SUVs this festive season might have to attend longer with passenger car makers prone to fall brief by as much as 100,000 items in October manufacturing attributable to extreme scarcity of semi-conductor chips.

Senior business executives ET spoke to indicated wholesale volumes will decline for the second straight month by 25-28% to 2.4-2.5 lakh items in October, additional lowering stock for deliveries in the course of the upcoming festivals of Navratri and Diwali. This can be the bottom wholesale quantity recorded within the month since October 2014, when producers dispatched 221,163 passenger automobiles from factories, exhibits knowledge accessible with business physique Society of Indian Automobile Manufacturers (SIAM). Automakers in India report wholesale volumes and never retail gross sales to prospects.

Passenger car gross sales fell 37% to round 185,000 items in September 2021. About 334,000 items had been bought in October 2020.

The provide challenges have surfaced at a time when the business is already sitting on bookings of over half one million items. As per knowledge accessible with automotive consultancy agency JATO Dynamics, the ready interval on in style fashions reminiscent of Hyundai Creta at present stretches into 12-32 weeks, Kia Sonet 15-20 weeks, Maruti Suzuki Ertiga 12-14 weeks, Nissan Magnite 12-16 weeks and Tata Nexon 10-12 weeks.

“Carmakers normally construct stock in the course of the Shradh interval, when retails are gradual, forward of the festivals of Navratri and Diwali when demand spikes. However, this yr, because of the scarcity of semi-conductors, the anticipated build-up of inventory didn’t materialise”, mentioned Shashank Srivastava, senior government director (advertising and gross sales) at Maruti Suzuki. Srivastava declined to specify quantity estimates for month.

Earlier this month, market chief Maruti Suzuki mentioned car manufacturing quantity might be 60% of regular manufacturing in October owing to a provide constraint of digital elements attributable to a scarcity of semi-conductors. The firm had lower output by 60% in September.

Carmakers Hyundai Motor India, Kia India and Mahindra & Mahindra (M&M) too reported robust double-digit drop in manufacturing unit dispatches in September on again of provide constraints.

Carmakers usually enhance channel stock by 10-15 days in September to spice up retail gross sales in October and November. “Festival season in India normally augurs a peak in automobile gross sales, however chip shortages are prone to curtail stock considerably this yr”, confirmed Ravi Bhatia, president of JATO Dynamics.

Auto retailers have mentioned passenger car sellers are left with little stock, besides these for some slow-moving fashions. “Given low provides, festive reductions on passenger automobiles are 25-30% decrease this yr”, mentioned Nikunj Sanghi, former president at Federation of Automotive Dealers Association (FADA) and managing director at JS Fourwheel Motors.

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