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Growth moderation to solve demand-supply issue: Auto industry

Growth moderation to solve demand-supply issue: Auto industry
PTI
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First Published: Sun, Aug 08 2010. 11 25 AM IST
Updated: Sun, Aug 08 2010. 11 25 AM IST
New Delhi: Caught between ever-rising demand and a shortage of components supply, the Indian automobile industry, which has been growing at around 30% this fiscal, expects a moderation of the unusual growth to help restore normalcy.
Society of Indian Automobile Manufacturers director general Vishnu Mathur told PTI that the component supply shortage is a serious issue, although it is restricted to specific components such as tyres and aluminium castings for specific original equipment manufacturers.
“But we hope things will be sorted in due course of time, as component-makers are adding additional capacities, while the unusual high growth of auto sales is also expected to moderate as time progresses,” Mathur added.
In the April-June quarter, domestic auto sales stood at 35,34,922 units, a growth of 28.92% from the year-ago period. In terms of production, output by auto-makers in India during the quarter was 40,91,485 units, up 33.27 per cent from the same period last year.
With ever-increasing demand, the country’s largest car-maker Maruti Suzuki India is already running at full capacity and is struggling to meet orders.
“At present, we have an order backlog of about 15-20 per cent of monthly sales,” MSI Managing Executive Officer (Marketing and Sales) Mayank Pareek said, adding that the firm is also suffering from a components supply shortage.
Expressing similar views, Hyundai Motor India Ltd (HMIL) Managing Director H W Park said: “We also have supply constraints, especially of tyres. But this is true for the whole industry as we are witnessing an unusually high growth.”
Such is the demand that Toyota Kirloskar Motor has suspended bookings for its SUV Fortuner till January, as its order backlog has crossed 6,000 units.
Mahindra & Mahindra President (Automotive and Farm Equipment) Pawan Goenka said the firm’s auto division saw an 8-10 per cent production loss in the June quarter due to a shortage of spare parts.
The component-makers said their vendors are operating at full capacity, but meeting the demand of unexpected growth is proving to be a challenge.
“The growth that is happening is unprecedented. Nobody anticipated such a growth, but every growth has its own challenges,” Automotive Component Manufacturers Association of India (ACMA) Executive Director Vinnie Mehta said.
Sympathising with the vendors, MSI Chairman R C Bhargava said: “The problem is more because growth is at a very rapid pace. Component-makers, who used to take five years to expand, are doing it in one year now.”
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First Published: Sun, Aug 08 2010. 11 25 AM IST