Prolonged waiting period due to chip crunch can harm demand: Maruti Suzuki

Longer waiting periods with shortage affecting production can have a negative impact on car demand, although the supply constraints of chips have gradually improved over the last few months, according to a senior official of car market leader India.

The company currently has a pending order of around 2.5 lakh units with demand in the market continuing to be buoyant, while its production was over 80 per cent of normal in November.

“The bookings show that the demand continues to be quite robust, both in terms of inquiries and the bookings, but now availability is an issue and waiting periods have gone up,” India Ltd (MSIL) Senior Executive Director (Marketing & Sales) Shashank Srivastava.

He further said, “So we are a little bit afraid that the longer waiting periods will affect the demand pattern and it can have a negative impact.”

Depending on models and variants the waiting period can range from weeks to months in the domestic passenger vehicles market at present.

Srivastava, however, said there have not been booking cancellations as the company has been constantly communicating with its customers.

“Almost every customer is being contacted every week, explaining the situation of why there is a waiting, and when they are likely to get the vehicle. And most consumers, I’m happy to say, understand this and we are also very grateful that they have not cancelled that booking because of this waiting period,” he added.

Besides, the company is trying its “best to increase the production as much as possible”, in order to overcome the situation, he added.

Stating that the supply constraint due to shortage has improved, Srivastava said, “If you look at the availability of electronic components, this is affecting the production since August and onwards. Situation is getting a little better — September was 40 per cent of the planned production, October was 60 per cent, November was about 83-84 per cent and December, as we have stated it will be about 80 to 85 per cent”.

While things are improving, he said when it will become normal is going to take some more time but it is difficult to predict because the global supply chain is involved.

It is not just Maruti or one vendor of Maruti but also other OEMs in the industry and not just India, but across the globe all OEMs are affected by this, he added.

Srivastava also said the current decline in sales is largely because of the supply issue and not a demand issue.

“There is an upswing in the market if you look at a longer period,” said, adding in the Apil-November period this year the overall industry sales were around 19 lakh units as compared to 15 lakh units in the year-ago period, which is a growth of over 26 per cent.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Source link