Indian carmakers likely to lose $1 billion in September revenue due to chip shortage: Report

The output of the Indian passenger vehicle industry in September is likely to be reduced by over lakh units as compared to previous years owing to the global shortage of semiconductors. This fall in output could lead to a potential loss in revenue to the tune of over $1 billion amid a spike in consumer demand, which is roughly equivalent to 4% of the total revenue of the passenger car makers in India, The Economic Times reported citing industry insiders.

The insiders revealed that the carmakers are struggling to lay their hands on the last chip possible in order to get the production running ahead of the festive season when demand spikes. The pending bookings of cars have shot up to 4-5 lakh across the entire industry, the report added.

Plummeting numbers

According to the ET, the output for September could be between 1.8-2.15 lakh units, which will be the lowest in close to a decade, without considering the months when the production was suspended last year due to the nationwide lockdown following the first wave of the COVID-19 pandemic.

According to the data from Society of Indian Automobile Manufacturers (SIAM), cited by the ET, if the output reaches the higher end of the estimates pegged at 2.15 lakhs, it would be equal to that of June 2013. On the lower end of 1.8 lakhs, it would be the lowest since December 2009. Over the last four years, the output of carmakers for September stood between 2.78-3.43 lakh units and the projected output for the current month could possibly be 37% lower than September 2020. Carmakers on the other hand anticipate their wholesale volumes for this month to be close to 2 lakh units.

Earlier this week, India’s largest carmaker Maruti Suzuki announced that it will be slashing its September output by a staggering 60% owing to the global semiconductor shortage. Leading vehicle manufacturer Mahindra & Mahindra will see a 25% dip in its production this month and has also declared seven ‘no production days’. Other companies like Renault-Nissan, Ford and MG’s operations continue to remain at lower capacities too.