Automakers warn of supply chain disruptions despite rising car sales

The Indian auto industry’s concern over supply chain disruptions is in line with that of the global auto industry.

By : HT automatic office
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Updated:
03 April 2022, 15:23

Indian automakers are worried about the worsening supply chain crisis. (MINT_PRINT)

Several automakers in India reported a surge in annual vehicle sales in the 2022 financial year, which ended on Thursday. But, despite the improving sales scenario, automakers have warned of future risks of global supply chain disruptions. The main disruption among these will be the shortage of microchips, due to the ongoing war between Russia and Ukraine.

(Also read: Electric truck maker Rivian says Russian-Ukrainian war is making supply chain problems worse)

Maruti Suzuki, India’s largest automaker, reported a 13% increase in sales over the past fiscal year, with 1.65 million units sold. The automaker recorded its first sales growth in two years. But the automaker warned that the electronics component supply situation remains unpredictable. Maruti Suzuki expects the disruption to impact current year production volume.

Another key automaker in India, Tata Motors, also reported its highest ever annual passenger vehicle sales in the past fiscal year. Tata Motors sales jumped 67% to 370,372 units from a year ago. Its electric car sales also nearly quadrupled to 19,000 units.

Despite the encouraging sales performance, Tata Motors expects a disruption in the microchip supply chain in the coming days. Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said that going forward, the semiconductor situation remains uncertain. He also said the automaker is closely monitoring developments.

The Indian auto industry’s concern over supply chain disruptions is in line with that of the global auto industry. Globally, automakers have been forced to make steep production cuts over the past year as supply chain disruptions and high demand for consumer electronics have led to shortages acute of semiconductors. With modern cars relying heavily on microchips, this shortage has resulted in a long waiting period for car buyers as production has been affected in the automotive industry.

The situation in the chip manufacturing industry was gradually normalizing when the Russian invasion of Ukraine further deteriorated the situation. Both Russia and Ukraine are key suppliers of crucial raw materials used to manufacture semiconductors. The unfolding crisis has further clouded the future of the microchip industry and the automotive industry.

In this regard, ICRA said that the impact of the crisis in the form of higher fuel and raw material prices poses a risk to the outlook for automotive demand, should it materialize in a long drawn out war.

Date of first publication: 03 April 2022, 15:23 IST

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