Companies

Auto majors sitting on 7.5-lakh pending orders as chip shortage plague supply

Swaraj Baggonkar | | Updated on: Apr 24, 2022
A customer at Maruti Suzuki dealership

A customer at Maruti Suzuki dealership

Long waiting period also skewing true demand scenario: Industry watchers

Mumbai, April 24 With no visibility on supply of semiconductors beyond a few weeks, Indian carmakers are sitting on pending orders of more than 7,50,000 units, the highest-ever.

Car market leader Maruti Suzuki claims to have pending orders of 3,25,000 units, which is the highest ever in the company’s nearly 40-year history. All CNG-powered models, especially the CNG Ertiga, have a significantly high waiting period stretching to as much as six months.

Hyundai, Tata Motors and Mahindra & Mahindra (M&M) together have bookings for 3,50,000-3,75,000 units. Hyundai Creta, Tata Nexon and Punch, Mahindra XUV700 and Thar continue to witness a surge in demand. These top four carmakers control 80 per cent of India’s passenger vehicle market.

Two new debutants from Kia and Skoda – Carens and Slavia – have also generated a positive response. The Kia Carens carries a waiting period of 4-6 months, while the Skoda Slavia has 2-3 months’ waiting period.

Volkswagen’s upcoming sedan Virtus, for which bookings opened a few weeks ago, has also met with encouraging reception. Honda City Hybrid, which was launched a few days ago, has received an “overwhelming” response from the market, claimed Honda Cars India.

The true market picture

While the industry’s total number of bookings may be good enough to cover three months of the country’s total passenger vehicle sales, carmakers warn that booking numbers do not necessarily represent the true picture of market demand.

Shashank Srivastava, Senior Executive Director, Marketing and Sales, Maruti Suzuki India, said, “Consumers are not just making bookings with multiple dealers for one product, but are also booking vehicles of other car brands. They will go for the product that gets delivered to them first. Therefore, the current market situation does not provide you with the real demand.”

With one buyer doing multiple bookings, booking cancellations have also gone up across the industry.

Fall in enquiries

Srivastava added that the number of enquiries its dealerships received have also gone down because consumers have factored in the long waiting period in the overall process of car buying. He, however, added that the company’s online portal is receiving a strong response though the conversion rate is not strong (compared with dealerships).

The surge in booking continues parallelly with the issue of shortage of semiconductors, which has been plaguing the industry for the past several quarters. Though semiconductor manufacturers have improved output across the globe, demand continues to outpace supply.

“Even after months of struggling with this issue, we still do not have visibility beyond a few weeks with regard to supplies of chips. The situation continues to remain dynamic and beyond our control, but each company is working hard to avoid letting go of even one chip,” said a senior executive of a leading carmaker.

  

Published on April 24, 2022
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