NEW DELHI: Due to global shortage of semiconductors, Indian car manufacturers had a cumulative pendency of over 7 lakh orders as of December 2021, the Economic Survey 2022 revealed. With the delay in supply, the average lead time in the automobile industry for 2021 has been around 14 weeks globally. India has also experienced similar trends in the automobile sector, the report said.
As per data from the Society of Indian Automobile Manufacturers (SIAM), carmakers sold 219,421 passenger vehicles in the domestic market in December 2021, down 13 per cent (YoY). This is not a demand problem but a supply-side issue, said the survey.
While fall in PV sales can be attributed to supply side constraints that have resulted in lower production, record fall in two-wheeler sales is linked to rising petrol prices, lower purchasing power and rural distress. Sales of two-wheelers in the Q3FY22 was lowest in 9 years, as per Siam data.
Citing a report by investment bank Goldman Sachs, the survey noted that that the supply chain disruptions in the semiconductor industry have spillovers in over 169 industries. "The manufacturing of semiconductors requires large amount of capital and has an average gestation period of 6-9 months. Moreover, it has a fairly long production cycle of about 18-20 weeks. Hence, any recovery from the supply chain disruptions will be a slow and costly affair," the survey noted.
According to data issued by carmakers and industry sources, India's largest carmaker Maruti Suzuki had more than 240,000 pending customer orders at the end of the December quarter. The company had last week informed that though still unpredictable, the electronics supply situation is improving gradually. MSIL hopes to increase production in March quarter, though it would not reach full capacity. Hyundai, Tata Motors and Mahindra had around 1 lakh pending orders each in December.
'Barbell strategy'
"The government opted for a 'Barbell Strategy' that combined a bouquet of safety-nets to cushion the impact on vulnerable sections of society/business, with a flexible policy response based on a Bayesian updating of information."