Automakers say worst of chip shortage behind them

The global chip shortage, which forced automakers to slash production and shutter plants during the pandemic years, is easing.

That has brought a lot of cheer to India, which is the world’s fourth-largest auto market, and helped companies here stage a production recovery, automakers and industry experts told DH.

“The supply side constraints seem to be easing a little bit and we are around 95 per cent of the overall planned production,” said Shashank Srivastava, Senior Executive Officer, Marketing and Sales, Maruti Suzuki India Limited.

India's largest carmaker Maruti Suzuki recorded a year-on-year wholesale growth of 29 per cent in domestic passenger vehicle sales in October, while homegrown auto majors Tata Motors and Mahindra recorded 33 per cent and 60 per cent growth respectively on the back of easing chip shortage, according to data released on Tuesday.

The strong data renewed optimism for the sector.

All major original equipment manufacturers (OEMs) are being able to increase supply to their dealers in recent times as the chip supply has started normalising, said Manoj Garg, the director of investments at WhiteOak Capital Management.

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The Covid-19 pandemic drove more people to opt for personal forms of mobility and made many work from home, fuelling demand for chips across sectors from autos to electronics.

The post-pandemic era saw a moderation in the overall chip demand from sectors other than automobiles, easing the supply woes faced by carmakers, Garg said.

“As far as semiconductors are concerned, for certain components we have a challenge but we are trying to mitigate that risk to other alternate options which we have been taking in the past very effectively,” a Tata Motors spokesperson told DH.

Waiting periods

Despite easing chip shortage, pent-up demand and a strong festive season have ensured long wait times for select top models.

While Maruti’s models such as Alto, Celerio, Wagon-R, S-Presso and Alto K10 have seen their waiting periods come down by less than a week from six to eight weeks before, customers will have to wait around six to seven months to get their hands on top models such as Brezza, Grand Vitara, Dzire, Swift, Baleno, Ertiga and XL6.

Tata Motors is in the same boat.

“Waiting period for our passenger vehicles ranges from 4-12 weeks, depending on model variant and colour. And for EVs, the same goes up to 5 months,” a Tata Motors spokesperson told DH.

Some experts see the chip shortage persisting for some part of 2023.

“By the second half of 2023, we may see complete normalisation of the chip supply,” Garg said.

Sales in the world's fourth-largest auto market have not yet surpassed pre-pandemic levels, but all signs point to better days ahead.

“It (post-festive season) may release pent-up demand and seasonality may start hitting the industry. However, industry seems to be well poised to surpass the peak achieved in FY19,” said Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Ltd, and Tata Passenger Electric Mobility Ltd.