If you are planning to book a Mahindra vehicle and expecting delivery during the festival days you might have to wait longer and desired. Semiconductor shortage and strong demand for models are expected to play spoilsport for Mahindra car buyers with an extended waiting period.
The Thar SUV has open bookings of more than 39,000 and a waiting period of around 10 months while the XUV300 has more than 10,000 open bookings with a two months pipeline. The Bolero Pikup has close to 30,000 bookings by the end of April-June quarter.
Rajesh Jejurikar, executive director (automotive and farm equipment sectors), Mahindra & Mahindra said, “The festival season will be very strong from the demand point of view and very uncertain from supply point of view. The festival period is going to be difficult for waiting period for everybody based on what we are hearing.”
The festive days which begin with Onam in Kerala and Ganesh Chaturthi in Maharashtra, Goa, Karnataka and Gujarat typically generate more than 40 percent of passenger vehicle demand for a year. This year’s demand during festive days is expected to be strong, according to all automotive companies. However, due to the shortage of chips, production will be constrained in the coming months.
“COVID is affecting Malaysia’s chip production. Right now, the situation is very dynamic and uncertain. We have to watch this space. There is at least a 22-25 percent gap into demand and supply due to semiconductor as far as M&M is concerned,” Jejurikar added.
M&M’s production schedules have been severely disrupted in the previous months with forced closure due to shortage of semiconductors. Thar is one of the models that has been affected due to this. Maruti Suzuki, the country’s largest carmaker, announced that group company Suzuki Motor Gujarat has decided to keep production shut for three Saturdays of August due to the chip shortage.
When asked if M&M could also be forced to undertake similar production shutdowns, Jejurikar said, “We are evaluating it, once we have a view, we will put out a notice as is statutory required. Any decision we take of this kind is we have to share it with the stock exchanges. We have not reached that situation yet. We are still seeing what we have in the inventory and what is the balancing that needs to be done.”
Raw price hike is another issue bothering the automotive industry, including M&M. The company, in line with the rest of the industry, raised prices of its models in July, but cautioned that margins are expected to remain under pressure moving forward.
“Commodity inflation has been huge. Margins at the operating level have been affected. We have taken price increases with some lag. We have tried to offset the increase with a much stronger management of fixed cost and we have rationalised it on the auto and the farm side. Margins are going to be under pressure. We are doing the best we can,” Jejurikar added.
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