New Delhi: The ongoing global chip crisis may douse the approaching festive season sparkles as the industry may Have to scramble to meet the increased demand during this period, a senior executive of Mahindra & Mahindra (M&M) said.
“The festive period is going to be difficult for the domestic auto industry as timely delivery of vehicles will become a challenge due to the shortage of semiconductors. Besides, resurgence of a COVID third wave continues to be of concern. This upcoming festive season will be very strong from the demand point of view but pretty uncertain from the supply side,” Rajesh Jejurikar, executive director, M&M, said.
In general, automobile makers and retailers count on the season for a sales boost but the recent supply constraints due semiconductors crunch has led to a high waiting period for certain vehicles and also depleted vehicle inventory. Analysts say that the absence of semiconductors is depriving carmakers of a chance to make up for the lost sales.
At present Mahindra Thar has one of the highest waiting periods in the Indian car market. The company’s highest selling SUV has over 39,000 open bookings and a waiting period of around 10 months. XUV300, another popular model from the Mahindra stable, has received 10,000 open bookings within a two months pipeline. Relatively, Bolero and Scorpio have the lowest waiting period of 1 to1.5 months.
A critical shortage of this important electronic component that began in the first quarter of 2021 has halted assembly lines around the world and India is no exception. The country’s largest automaker Maruti Suzuki earlier this week announced that vehicle production at its plants in Manesar and Gurugram in Haryana will partially get impacted due to the lack of chips.
“Some of the production lines may see temporary reduction from 2-shift to 1-shift working. As the situation is dynamic and uncertain, the company will monitor and take a day-to-day decision on models, lines or shifts to optimize resources for maximum efficiency,” the automaker said in a regulatory filing.
Another major automaker Tata Motors also pointed out last month that the issue of semiconductor shortage is impacting its ability to meet emission compliance.
However, when asked about the decision over the plant shutdown, M&M said that it is still analyzing the situation. “We are still evaluating it and haven’t reached the conclusion yet,” the company management said.
The Mumbai-based company has reported a consolidated profit after tax (PAT) from continuing operations at INR 424 crore for the first quarter ended June 2021. Consolidated revenues of the company stood at INR 19,172 crore in the first quarter compared with INR 11,969 crore in the same period last year.
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Total income for Q1 FY22 was recorded at INR 19,368 crore compared to INR 12,163 crore in Q1 FY21. Revenues from operations were at INR 19,171.9 crore as against INR 11,969 crore in the first quarter of FY21.