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File photo used for representational purpose. (Bloomberg)
File photo used for representational purpose. (Bloomberg)

Your favourite car may be delayed by months: Why festive cheer may be a frown

  • Brisk buying usually brings mighty cheer during festive period in India but with a global shortage in semiconductors, supply disruptions may hamper prospects this year around.

The Indian automotive industry had found a lot of festive cheer in an otherwise gloomy 2020 as it had shown remarkable resilience and crafted a sales turnaround by beating past Covid-19 pandemic blues. A year on, the cheer is likely to be significantly less because while the pace of vaccination has meant the country is fast returning to some sort of normalcy, there is another crisis that has made the going very tough - global semiconductor shortage.

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(Also read: Supply chain snarls could cost automakers $210 billion this year, forecast finds)

The shortage in crucial chip that function as brains for modern-day vehicles has caused production delays for almost every major auto manufacturer, in India and elsewhere. Production cuts were previously announced while it has, directly or indirectly, also contributed to a hike in prices. While paying more is one aspect of the woes for the end customer, it is the delay in deliveries that may well act as a dampener this year.

Maruti Suzuki, the country's largest car maker, had a lower production as well as a lower sales report card to show for September. The company doesn't expect October to be much better and points straight at the shortage in electronic components as a limiting factor. Almost every other manufacturer, from MG Motor India to Kia India, Tata Motors and others say that a cautious approach is the best way forward.

The festive months of October and November, however, are usually when automotive companies engage the top gear without much reference to terms like ‘cautious approach.’ But the current shortage in component parts could hardly have come at a worse time.

Sales generally tend to slow down towards the end of November and through December when customers push back purchase plans for the next year. This is also, therefore, a period when OEMs tend to offer discounts to clear existing stock. But even that is rather unlikely this year.

And no, the troubles aren't likely to vanish any time soon.

Top officials of Mercedes, Toyota, BMW, Volkswagen and others have said on record that they expect the problem of semiconductor shortage to persist till 2023. With demand for these crucial components rising significantly with the world returning to normalcy, supply has failed to keep pace. And the path ahead may continue to be one peppered with challenges galore.

  • First Published Date : 06 Oct 2021, 09:14 AM IST