Chip shortage offsets high demand: car sales slow
Despite strong demand, the shortage of electronic components continued to hurt car sales in September, with major automakers reporting lower sales in September. Industry insiders have said if the chip shortage issue persists, it will hurt their sales prospects in the upcoming holiday season.
While Maruti Suzuki India recorded a 57% year-on-year decline in domestic wholesale shipments to 63,111 units in September, Hyundai Motor India Limited also recorded a 34% decline in September sales to 33,087 units. Even Mahindra & Mahindra and Honda Cars India recorded year-over-year sales declines of 11.6% and 33.7% respectively.
Among the major players, Tata Motors reversed the trend by announcing growth of 21.4% with sales of 25,730 units in September, including 1,078 units of electric vehicles.
While Maruti had recorded sales of 1,47,912 units in September 2020, the number fell sharply last month as production hit by a shortage of chips. “The company’s sales volume in September 2021 has been negatively affected due to the shortage of electronic components,” the company said in its statement.
Even Hyundai Motor said that “the global semiconductor supply constraint has hampered vehicle production, resulting in low shipments in September.”
Industry players say demand has not been an issue and they are limited on the supply side. Rajesh Goel, Director of Marketing and Sales at Honda Cars, said: “On the demand side, there is good momentum in the market with improved buying sentiment. However, supply chain hurdles, including the widespread chip shortage, presently pose a big challenge for the industry. “
As the pace of vaccinations improved and the economy picked up and saw demand growth across sectors, industry sources say the upcoming holiday season could have resulted in growth for the sector without constraints on the supply of electronic components.
“Going forward, demand for cars and SUVs is expected to remain strong over the coming holiday season; However, the electronic component supply situation may continue to experience difficult times, ”said Shailesh Chandra, president of the passenger vehicle business unit, Tata Motors.