Mumbai: Ongoing lack of chip Passenger vehicle sales are expected to grow by 11-13 per cent this fiscal, lower than the earlier estimate of 16-17 per cent growth, delaying the industry’s recovery as strong demand due to production restrictions The waiting period is increasing, says a report.
NS lack of semiconductors According to a Crisil analysis of the top three passenger vehicle companies with a combined market share of 71 per cent, sales will decline by 400-600 basis points from 16-17 per cent to 11-13 per cent. .
Semiconductors or chips are key components of a vehicle as they facilitate a range of features such as navigation, infotainment and traction control and the use of chips is more premium.
The report said that for OEMs, the shortage has led to a reduction in production, while for customers, the waiting period for some models has increased from 2-3 months to 6-9 months.
The pandemic-induced uncertainties led to a sharp turnaround in orders from auto companies, which account for 10-12 per cent of global chip demand, as chip makers divert their supplies towards other sectors such as consumer electronics, the report said. which showed a significant increase. demand, especially during the lockdown months of the pandemic.
The report blames poor inventory planning by OEMs, chip hoarding by Chinese companies and logjams at ports besides natural calamities affecting major chip factories.
Since the pandemic began, the preference for personal mobility has increased, leading to higher-than-expected demand for cars, it said.
In addition, consumers are also preferring vehicles with more electronics-powered features that employ more semiconductors, the report said.
The chip shortage has resulted in a cut in car production, which will also have an impact on the current festive season, when sales are usually high.
“Consequently, we see overall growth for the automobile industry in this fiscal year,” the report said, adding that the shortfall is expected to persist into the first quarter of 2022 as capacity addition is not keeping pace with demand. It takes at least 12-18 months to set up a greenfield chip facility.
OEMs on their part are tackling the shortfall by diverting chips to high-demand segments such as utility vehicles (51 per cent of sales in the first half of this fiscal, up from 42 per cent from mid-segment vehicles including sedans), and premiums. Prioritizing the production of cars. Some of them are also removing features from some models to save on chip usage, it said.
Besides, the impact on operating leverage stemming from production losses, higher metal prices could also reduce their operating profit by 100-150 bps to 6.5-7 per cent, the report said, however, the report said. Their credit profile will remain stable. Still healthy cash flow, strong balance sheet and strong liquidity.
NS lack of semiconductors According to a Crisil analysis of the top three passenger vehicle companies with a combined market share of 71 per cent, sales will decline by 400-600 basis points from 16-17 per cent to 11-13 per cent. .
Semiconductors or chips are key components of a vehicle as they facilitate a range of features such as navigation, infotainment and traction control and the use of chips is more premium.
The report said that for OEMs, the shortage has led to a reduction in production, while for customers, the waiting period for some models has increased from 2-3 months to 6-9 months.
The pandemic-induced uncertainties led to a sharp turnaround in orders from auto companies, which account for 10-12 per cent of global chip demand, as chip makers divert their supplies towards other sectors such as consumer electronics, the report said. which showed a significant increase. demand, especially during the lockdown months of the pandemic.
The report blames poor inventory planning by OEMs, chip hoarding by Chinese companies and logjams at ports besides natural calamities affecting major chip factories.
Since the pandemic began, the preference for personal mobility has increased, leading to higher-than-expected demand for cars, it said.
In addition, consumers are also preferring vehicles with more electronics-powered features that employ more semiconductors, the report said.
The chip shortage has resulted in a cut in car production, which will also have an impact on the current festive season, when sales are usually high.
“Consequently, we see overall growth for the automobile industry in this fiscal year,” the report said, adding that the shortfall is expected to persist into the first quarter of 2022 as capacity addition is not keeping pace with demand. It takes at least 12-18 months to set up a greenfield chip facility.
OEMs on their part are tackling the shortfall by diverting chips to high-demand segments such as utility vehicles (51 per cent of sales in the first half of this fiscal, up from 42 per cent from mid-segment vehicles including sedans), and premiums. Prioritizing the production of cars. Some of them are also removing features from some models to save on chip usage, it said.
Besides, the impact on operating leverage stemming from production losses, higher metal prices could also reduce their operating profit by 100-150 bps to 6.5-7 per cent, the report said, however, the report said. Their credit profile will remain stable. Still healthy cash flow, strong balance sheet and strong liquidity.
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