Profit Sheets

Auto sale’s down 25% in October on chip shortage, weak demand

November 12, 2021 04:45 PM

Auto sale's down 25% in October on chip shortage, weak demand
Maruti Suzuki led the fall during October followed by Hyundai, Kia, Renault and Honda. Tata Motors and Mahindra & Mahindra managed to clock growth during the same month in production and sales volumes.

Sale’s of passenger vehicles and two-wheelers(Auto sale’s) remained in the red in October due to lack of adequate supplies of semiconductors and poor offtake, as per data shared by the Society of Indian Automobile Manufacturers (SIAM).

Passenger vehicles (PV) comprising cars, SUVs and vans saw 27 percent fall in wholesale dispatches to dealers to 226,353 units as against the same period last year. Data of Tata Motors, BMW, Mercedes, Audi and Jaguar Land Rover are not included in the sales total. Withdrawal by Ford from the domestic market also impacted sales.

The fall is majorly attributed to the inability of companies to match demand with supplies because of the crunch in availability of chips. The fall comes on the back of the industry sitting on pending orders of more than 550,000 units, as claimed by companies.

Maruti Suzuki led the fall during October followed by Hyundai, Kia, Renault and Honda. Tata Motors and Mahindra & Mahindra managed to clock growth during the same month in production and sales volumes. With companies unable to deliver booked models within the usual time period, waiting periods have stretched to a year in some cases.

Also Read : Auto sales in H1 FY21 improve serially but remain in red across segments

While the chip shortage has hit two-wheelers manufacturers too, retail demand has been a bigger worry for the manufacturers. October reported 25 percent decline in wholesale two-wheeler dispatches to dealers to 1.80 million units as against the same month last year.

Rural demand which was robust in 2020 due to bumper crop income was poor in 2021 due to the after effects of the state-wise lockdowns earlier this year. High petrol prices and the continuous increase in product prices also deterred buyers significantly. Analysts say the festive season of 2021 has been the worst in several years for the segment.

Market leader Hero MotoCorp led the sale’s fall during October followed by Honda Motorcycle and Scooter India, Bajaj Auto and TVS Motor Company.

While three-wheeler volumes grew by 19 percent to 31,774 units during October compared to the same month last year, sales data of commercial vehicles was not made available by SIAM.

Rajesh Menon, Director General, SIAM said “Manufacturers were banking on the festive season to recover from the severe drop in sales they have faced in the early part of financial year 2021-22. However, shortage of semiconductors and steep hike in raw material cost have been a major spoilsport for the industry.”

According to automakers there has been a slight improvement in supplies of semiconductors in the past few days and the trend is expected to continue in the coming months.

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