How Semiconductor Shortage has impacted the Automobile Supply Chain in India
Post-Covid; the Demand for Passenger Cars has shot up citing the urge of having personal mobility by consumers. However, Automakers in India are facing a different sort of challenge - No adequate supply to cater to the demand!
Be it an Old Model, Newly Launched Model, or Chart-toppers – All cars today are in a waiting period of weeks or even months. For instance, we have Kia Cars waiting for up to 5 months in some cases, the Ertiga waiting period is up to about 4 months, Fortuner has 3 to 4 months waiting.
The Dealership network stocks are getting thinner by the day. Few are on a week’s stock and the rest are averaging around 10 to 15 days. Be aware, this supply constrain is not a short-term issue of a few weeks. This supply constraint in all likely hood will stay till H1 of the Calendar Year. We are talking about another three to four months.
The Semi-Conductor shortage has resulted in supply constraints. This is applicable to all segments of the Passenger Car industry. When the Pandemic hit the Indian Markets, followed by lockdowns, the Indian Automobile companies went conservative in terms of the forecast of demand. This resulted in lower orders of the chips being placed initially.
So where did the production of chips go?
It is worth noticing that the demand for the chips moved to the electronic gadgets being used for personal use. We had elevated sales of Laptops, TVs, Mobile Phones, and consumer electronics post pandemic. The period of Oct, Nov & December saw a rise of 13% in Television Sales followed by 8% jump in mobile Sales.
So when does the Supply of cars normalize?
With all OEM’s getting back their demand forecast on the aggressive front, the production is expected to normalize within a 12 to 16 weeks period. So, we can see gradual ease of supply starting from Mid March and should normalize by end of June / July.
(This article was written by Aamir Ahmed, an auto zealot at heart, and rev-head by profession. You can connect with him at https://www.linkedin.com/in/aamir-ahmed-b0688423/)