Automakers Foresee Dip in Sales During Festive Season as Backlogs Pose Serious Threat

The festive season is perhaps the most crucial time for Indian car makers. This is the time their annual sales figure go up as a lot of Indian customers prefer buying new cars on festivals. But this trend could change this year due to the backlog in booking for leading carmakers like Hyundai, Maruti Suzuki, Mahindra and Kia. According to CNBC TV 18, these companies reportedly have a combined backlog of approximately 5 lakh bookings. This booking backlog is partly due to the slowdown in auto manufacturing due to the global chip shortage

The shortage has caused a dispatch shrink and companies are struggling to meet their current booking demands. Maruti Suzuki witnessed a sharp decline of 55 per cent in new dispatches in September 2021 when compared to the corresponding month last year. While the company dispatched a total of 1,52,698 units in September last year, the figure dropped down to 68,815 units this year. The company currently has a booking backlog of 2.10 units comprising Brezza and Alto.

For Hyundai, dispatches are down by 34.2 per cent in September 2021. As compared to the 50,313 units in September last year, the South Korean auto giant has managed only 33,087-unit dispatches in India for September 2021. While Hyundai has a backlog of 1 lakh units, its sister company Kia has 75,000 pending bookings.

Mahindra has managed to do well amidst the shortage and contains the dispatch shrink to 12 per cent. The company delivered 13,134 units in September this year against 14,857 dispatches in the corresponding last year. The company has a total of 1 lakh pending bookings.

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The shrink in dispatch capacity of the automakers means that the general waiting period for cars could be pushed further for a few days or months.

The supply chain of chip has been disrupted globally due to several factors including the COVID-19 pandemic, the US-China Trade war and the drought in Taiwan. Taiwan is the leading manufacturer of chips and the Taiwan Semiconductor Manufacturing Company Limited (TSMC) has a market share of more than 50 per cent. However, the drought in the country has disrupted production as the manufacturing process requires a huge amount of ultra-pure water.

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