Maruti Suzuki, Mahindra, Toyota expect sales to surge during festive season despite chip shortage – Mint

Companies such as Maruti Suzuki India, Mahindra & Mahindra and Toyota Kirloskar have registered a good response so far, and are expecting better sales in the coming months. However, the next big question mark is on the supply side of things. Similar to most industries dependent on semiconductors, the Indian automotive industry is also bearing the brunt of chip shortage, leading to late deliveries across the board. 

According to a PTI report, Maruti Suzuki India (MSI) Senior Executive Director Shashank Srivastava, said “At the moment demand looks ok. It is slightly better than last year. If we look at the bookings, enquiries, retails, these are robust. On the supply side of course we may have some adverse effects, we are monitoring that.”

Srivastava claimed that ahead of the Navaratras, the company plans to build a sufficient inventory that will help satisfy the growth in demand. He added that   MSI’s current inventory level is around 23-24 days while the appropriate level would be 30 days. MSI claims that production in September would be just 40% of the normal output due to the semiconductor shortage.

Elaborating on the current market situation, Srivastava noted that the sales this year were expected to be better than last year’s but these were still behind the peak years of 2017-19.

Srivastava said, “While we compare with last year, it looks positive this year. But when you compare it to the peak of 2017-19, then we are still 22-23 per cent off that peak so I think we would have to be very careful in saying whether the market situation is better. It looks better than last year but when you compare it with the peak in 2017-19, we are way off.”

Mahindra & Mahindra Automotive Division CEO Veejay Nakra claimed that overall demand has increased after the second wave of covid-19.  This indicates a good festive season with strong demand compared to last year.

Nakra said, “Utility vehicles (UVs) will continue to dominate the space of festive demand contributing to almost half of the PV segment. We are committed to enhancing the festive season offerings and focussed on making the new launches a big success and are working towards transforming the way we deliver experience to our customers.”

“The core focus is now to deliver a delightful customer experience, and we are leveraging all our digital tools and assets to enhance customer experience end-to-end,” he said.

The launch of Bolero Neo, XUV700 and Mahindra Thar is expected to further enhance the prospects of the company. In order to maintain margins with the growing input costs, Mahindra also executed calculated price hikes. 

“Further, the semiconductor shortage continues to be a global issue. This is leading to increased waiting periods across our brands. We are finding credible and innovative methods to address the challenge on priority. Our endeavour is to ensure optimum level of inventory at plants and dealerships in order to be prepared for the strong demand as we get into the festive period,” Nakra said.

Last week, Mahindra announced that its automotive division would be cut by up to 25% due to seven no production days across its plants. This break has been triggered due to the semiconductor shortage.

Toyota Kirloskar Motor (TKM) Associate General Manager (AGM), Sales and Strategic Marketing V Wiseline Sigamani also noted that the company is witnessing a gradual growth in demand. 

“We are making every effort to offer better services, digitalise our sales operations and reduce order to delivery lead time so they can get the vehicle at the right place and time, thereby enhancing customer delight,” he noted.

Sigamani further added that the uptick in demand would possibly continue for the coming festive season across the country due to factors like economic recovery, personal mobility requirements and new launches in the market.

“TKM also announced the launch of New Fortuner in January this year, which witnessed a tremendous response from our customers, and we expected overall sales momentum to continue this year,” Sigamani said.