MG Motor sees rising input costs, supply chain woes as auto industry's challenge

Rising input costs due to increasing price of raw materials and semiconductor prices, paired with supply chain disruptions due to the war between Russia and Ukraine could become headwinds for the Indian automobile industry in 2022, believes MG Motor India President and MD Rajeev Chaba. He also said that it could affect the growth of the Indian auto industry in 2022.

Chaba also said that the Indian auto industry was looking forward to more than 10 per cent growth in 2022 at the beginning of the year but if the current situation persists, it could have an impact on demand as the year progresses.

"The Indian (auto) market, before January and February, we were hoping that the 2022 calendar year could be the best year of all times and we could cross the peak which we had achieved in 2018. We were expecting 10 per cent plus market growth this year. As of now, if you talk in April, the situation seems to be okay but frankly, I can see huge headwinds coming to demand," Chaba said.

Explaining the reason behind the thought, Chaba said that material costs are going up massively due to metal prices going up. The chip prices too have gone up. Besides that, there's a huge supply chain disruption.

Chaba further said that "What's the effect of this on supply chain issues like logistics, like oil prices, like the metal prices? The inflationary issue is going to be huge, in my opinion and that's the risk because of that, it may have an impact on the automotive segment too. The demand may go down as we go forward." However, he also said that right now the impact is not yet felt in the market but if these kind of pressures, which are basically global issues, continue in the economy they will have an impact.