Chip shortage likely to derail PV sales: Fada
NEW DELHI: Automobile dealers’ body Fada on Tuesday expressed concern that the chip shortage issue could derail passenger vehicle (PV) retail sales during the festive season, as automakers are struggling with an adequate supply of vehicles to dealers due to production challenges.
Terming semiconductor shortage as a “full-blown crisis”, the industry body warned of a lacklustre festive season, especially for the passenger vehicle dealer fraternity, with low inventory levels and non-availability of the fast-moving model variants ahead of the peak festive period.
“Auto dealers are facing the most challenging phase of their business career as Covid-19 after-effect continues to play spoilsport. Until last year, when demand was a challenge, supply is becoming a bigger problem currently due to shortage of semiconductors, even though there is high demand for passenger vehicles,” Fada president Vinkesh Gulati said in a statement.
Every dealer by now starts planning for a bigger offtake in anticipation of a bumper festive season, but due to supply issues, inventory levels are at the lowest levels during this financial year, he added.
“With OEMs drastically cutting down productions due to unavailability of semiconductors and ABS chips, shortage of containers and high metal prices, customers for the first time may not get a vehicle of their choice and lucrative schemes during this festive season. The ultra-frequent price increase is also keeping entry-level buyers at bay,” Gulati noted.
He added that customers especially at the bottom of the pyramid were trying to save instead of buying articles like two-wheelers.
“This will hence keep demand for two-wheelers a concern. Though, with educational institutions slowly opening up, a ray of hope can be seen for an improved demand in coming months,” Gulati said.
Fada thus sees that the near term outlook will continue to remain a mixed bag with PVs witnessing demand-supply mismatch and two-wheeler segment facing a demand crunch, he noted.
The usage of semiconductors in the auto industry has gone up globally in recent times, with technological advancements and new models coming with more and more electronic features such as Bluetooth connectivity and driver-assist, navigation and hybrid-electric systems besides the engine control unit.