The Indian automotive industry has been navigating by way of an obstacle-ridden system practically two years and counting. And regardless of desire coming back again on monitor publish the second Covid-19 wave in the nation earlier this yr, the factors to rejoice are muted by motives to stay circumspect. Definitely then, the uncertainty close to a achievable 3rd wave courtesy Omnicron variant is now dulling sentiments more at a time when the world wide scarcity in semiconductor chip continues to be a problem and there is a mounting enter and operational value for models in the country.
The dawn of 2022 is becoming widely observed with a good little bit of warning by the worldwide automotive market but this caution, probably, is a lot more right here than in other essential marketplaces. It is genuine that the semiconductor shortage is predicted to continue being a headache for automotive brands around the world for at the very least the to start with many months of the new year. In India in unique, there are also variables this sort of as climbing quantity of Covid-19 situations as properly as northward trajectory of charges for corporations.
Will Omnicron slam brakes on auto sector?
The concern of a 3rd wave is ringing alarm bells loud and clear. “We see calendar year 2022 as a neutral calendar year as the rise of Omicron has as soon as all over again produced fear globally,” states Vinkesh Gulati, President of Federation of Vehicle Sellers Associations (FADA). “This may further impression the source in passenger cars if chip building countries go less than lockdown or prioritise chip generating for electronics used for ‘work from home’.”
Gulati also underlines compounding problems for the Indian two-wheeler industry if a 3rd wave gets to be a truth. Need for two-wheelers, he says, has presently been struggling with headwinds.
(Also read through – Worst festive time in a ten years as automobile retail income dip 18% 12 months-on-12 months: FADA)
From luxury automobile makers like Mercedes and Audi to mass-industry rivals like Tata Motors, Maruti Suzuki and Volkswagen, a massive quantity of brand names have officially highlighted soaring enter and operational fees as factors that are resulting in a demanding business surroundings.
OEMs in 4 and two-wheeler section have long gone ahead to announce price tag hikes powerful from January 1. This could be a tricky rope stroll because while demand for personal mobility solutions is possible to keep on being solid, price hikes could put off probable customers as very well. It is only the pre-owned car and two-wheeler phase that could go on its bull run.
Shortage and the woeful tail of waiting situations
Some very well known auto types in the market have a ready time spanning months to even a calendar year. Even though this could partly be because of to the reputation of the model and the consequent demand, there is also the trouble of conference shipping timelines at a time when there is an unparalleled pieces scarcity. The semiconductor chip scarcity is unlikely to form itself any time before long and this could result in additional creation and provide-chain concerns.
Authorities alert that a large waiting around period always delivers with it the likelihood that potential customers defer or worse, place off strategies of buy. MG lately arrived out to say efforts are becoming designed to meet up with shipping and delivery timelines as nicely as is attainable. “The problem will continue to be fluidic in 2022 owing to unpredictable factors – Covid-19, worldwide semiconductor scarcity ,freight cost and many other charge implications. We are continually monitoring these elements and aligning our functions to capitalise the greatest output,” explained Rajeev Chaba, President and MD at MG Motor India. (Comprehensive report here)
MG just isn’t on your own in possibly dealing with the obstacle or seeking to ramp up production.
The doable silver lining on an normally gloomy horizon could be the electric automobile segment that is predicted to increase by leaps and bounds in 2022. The bulk of the thrust will proceed coming from two and 3-wheeler segments but with entry of Hyundai and MG in mass-sector electric house, there is a opportunity that battery ability could define the new calendar year.