Weak demand for two-wheelers and less than adequate supplies of passenger vehicles due to the semiconductor shortages led to a 20 percent fall in total domestic automotive sales in September.
Total sales of automobiles (excluding commercial vehicles) declined to 1.71 million units in September from 2.14 million units in the same month last year, per wholesale sales data shared by the Society of Indian Automobile Manufacturers (SIAM).
Volumes of passenger vehicles (PV) comprising cars, SUVs and vans dipped 41 percent in September. PV sales during the month stood at 160,070 as against 272,027 units sold in the same month last year.
The fall in PV volumes comes as automakers struggle to meet demand due to the acute shortage of chips even as dealers sit on an order book exceeding 500,000 units, with the waiting period for certain vehicle models/variants stretching over six months.
Maruti Suzuki, the car market leader, had slashed production by 60 percent in September followed by cuts from Hyundai, Nissan, Mahindra & Mahindra and MG Motor. Maruti Suzuki claims to have pending orders for 215,000 PVs.
For the second consecutive month, sales of utility vehicles, comprising SUVs, was more than cars, highlighting the shift in consumer demand, as per SIAM data. With a crunch in the arrival of fresh stock and continued growth in retail demand, inventory of PVs with dealers and with automakers at around 2 weeks has hit one of the lowest levels in recent years.
Kenichi Ayukawa, President of SIAM said, “Indian automobile industry continues to face new challenges. While on one hand, we are seeing a revival in vehicle demand, on the other hand, shortage of semiconductor chips is causing a major concern for the industry. Many members have curtailed their production plans. Coupled with the festive season demand, this has led to a long waiting time for the customers on popular models of some segments. High raw material prices also continue to be a challenge.”
Besides the general slowdown in demand, two-wheeler volumes have also been impacted by the chip shortages. As per the data available, two-wheeler wholesale sales declined by 17 percent to 1.52 million during September as against 1.84 million units clocked in the same month last year. Inventory for two-wheelers at 40-45 days was at ‘comfortable’ levels as per dealers.
The production outlook for PVs for October is also bleak due to the continued shortages in semiconductors. Maruti Suzuki expects a 40 percent cut in output in October.
SIAM pointed out that volumes for the first half of the year (April to September) were still much lower than the same period of 2019-20. Total automobile volumes (including commercial vehicles) for FY22 at 8.27 million during H1 was 30 percent lower compared to 11.73 million of H1 of FY20 but 17 percent higher than 7.08 million of H1 of FY21.