Home/ Auto News / Chip dearth adds to wait for hot models

NEW DELHI : India’s passenger vehicle industry is expected to report a 10-15% decline from planned production in March due to semiconductor chip shortages, causing long wait periods for popular models such as those from Mahindra & Mahindra and Maruti Suzuki.

The agonizingly long waiting periods for popular models have prompted customers to cancel bookings or purchase off-the-shelf products from rival brands. As a result, some customers are opting for used cars or less popular variants with fewer features, leading to cancellations and softening of demand, industry experts said.

Automakers such as Mahindra & Mahindra and Maruti Suzuki have waiting periods of several months for some models. However, despite concerns about demand from April, when prices of many models are expected to rise again, automakers aim to ramp up production to meet the 720,000 open bookings for passenger vehicles and reduce waiting periods ranging from four weeks to over a year for some models.

“March will probably be the highest or second-highest Vahan retail registrations in the last five years for the passenger vehicle category. However, unseasonal rain, specifically in the grain-growing heartland, is likely to impact rural demand in the first quarter of the FY24, and we might not be anywhere near the peak in April," said Nikunj Sanghi, managing director of J.S. FourWheel Motors, an automobile dealership.

“In the third quarter of this fiscal, we lost about 46,000 vehicles or 47,000 vehicles in production due to semiconductor chip unavailability. We lost a large part of that in January and February also, and also we will be losing more of our planned production in March...It appears that in Q4 and at least in March, the loss for the month will be much higher than in the previous months in January or February. And we also see that the problem will persist in the next few quarters before it becomes more normalized. We have pending orders of more than 400,000 units so far. Chip shortages are limited to some models, so you see pending bookings going up, especially in those models," said Shashank Srivastava, senior executive director of Maruti Suzuki.

Mahindra & Mahindra is facing production issues with its popular models, XUV700, Scorpio-N, and Scorpio Classic, due to the limited availability of airbag electronic control units (ECUs), leading to extended waiting periods. The company planned to produce 6,000 units of each model and subsequently boost capacity by 40% in the next fiscal, but production has been hit by almost 15% in March due to supply constraints.

“Consumers have been waiting for a long time, and they’re now annoyed and restless. They are not willing to wait for over a year for a product specifically where they are not transparently being told what the delivery period will be. Hence, some of them are expected to move to easily available vehicles. Besides, automakers are hiking prices quarter after quarter, so as they wait, vehicles are also getting a lot more expensive," said Gaurav Vangaal, associate director at S&P Global Mobility.

“Right now, production schedules are stable because we have over 700,000 pending orders. So if demand does dip, it will not be visible immediately, and production levels will be determined mainly by supply-side factors," he added.

Waiting periods for Maruti Suzuki’s newly launched Grand Vitara hybrid SUV are currently at 3-4 months for the most popular variants, whereas variants of its Ertiga CNG model has a waiting period going over six months. A shortage of CNG kits is also adversely impacting deliveries of Maruti Suzuki’s newly revamped CNG line-up. For Mahindra & Mahindra, waiting periods for the Scorpio-N and XUV700 run from five months to well over a year.

Alisha Sachdev
Alisha Sachdev is an assistant editor with Mint based in Delhi. She reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies. She also focusses on developing multimedia properties for Mint and currently hosts the 'In A Minute' series and the Mint Primer podcast. Previously, she has worked with CNBC-TV18 and NDTV.
Catch all the Auto News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Updated: 31 Mar 2023, 12:13 AM IST
Recommended For You
Get alerts on WhatsApp
Set Preferences My Reads Watchlist Feedback Redeem a Gift Card Logout