As production and distribution facilities gradually open up and supplies resume, the chipset shortage will ease by the June quarter, said Madhav Sheth, president and CEO of the manufacturer’s international affairs. of Realme smartphones for India. “Our launch strategy for 2022 is on track,” he said.
Several CEOs have said they have lost significant revenue from potential sales this year due to the disruption, which has also delayed the launch of new models. But they expect losses to be smaller next year as production increases.
Indian automakers lost sales of around $ 5 billion or 20% of vehicle production in 2021, according to industry estimates. This figure is expected to drop to 10% next year. Gaurav Vangaal, associate director of global automotive forecasting firm IHS Markit, said India lost nearly half a million light vehicles due to semiconductor shortages in 2021.
“We see persistent challenges in global semiconductor production capacities to allocate and meet production demand for LV (light vehicles),” said Vangaal.
All auto and electronics companies have been facing a parts shortage and logistics delays for more than a year now due to manufacturing disruptions caused by Covid, container shortages, closures and port congestion.
Long-term contracts signed
These have also increased component prices by 40-100%, while logistics costs have increased fivefold from pre-Covid levels. The shortage has worsened due to increased demand for products with lifestyle changes such as work and home study, and people buying expensive products or cars during the pandemic.
In the past six months, Renault India has lost around 25,000 to 30,000 units, or 30% of its monthly output, due to the chip shortage.
“We could easily have averaged our sales at 12,000 units, but due to the shortage we were struggling to break through 8,000 units per month in the past six months,” said Renault India Managing Director, Venkatram Mamillapalle. “The situation is easing a bit, but the visibility on the offer is still low. We expect this challenge to continue until mid-2022.”
Panasonic India CEO Manish Sharma said there was a shipment delay of more than a month for components such as circuit boards which are expected to normalize by the second half of 2022.
The companies said they have also started to enter into long-term contracts with component manufacturers, including small suppliers, to secure capacity and also engage with new suppliers. This is bearing results, they said.
Skoda Auto Volkswagen has managed to secure priority allocation for seat chips due to new launches, but it is not yet receiving enough supplies to start a third production shift, which was slated for November. Gurpratap Boparai, managing director of Skoda Auto Volkswagen India, said the group sees significant growth in 2022 and will add a third team shortly.
While the group is expected to post strong double-digit growth thanks to the new models, it has refrained from giving growth forecasts due to the shortage of parts.
HP Inc.’s chief financial officer, Marie Myers, said on a recent appeal to investors that component shortages, as well as disruptions to manufacturing, ports and transit, “will continue to restrict income due to the ongoing pandemic in many parts of the world “. and will persist at least until the first half of 2022.