With Russia and Ukraine being the major producers of elements such as rhodium, cadmium and neon gas used in semiconductor chip manufacturing, the ongoing conflict between the two countries is causing tremendous concern among Indian automobile and component manufacturers, which are already Only badly affected by the lack of chips.
Prolonged conflicts inevitably mean more supply shortages and resultant delays in manufacturing end products. An already ongoing shortfall in the supply chain of vehicles is causing worrying delays.
“Our supply depends on how long the conflict lasts. If we are at war for a long time, it will affect everything. No one knows what is really going to happen. Rajiv Chaba, Chairman and Managing Director, MG Motor India said, “There has already been an increase in everything (cost) and the input cost is rising again.” business Line,
The issue here is that companies cannot hedge the cost of components such as steel or aluminum as these are now priced based on the current requirement. For example, the price of rhodium has been fluctuating over the past year and based on that, the prices of the final products are also changing.
“Last year, we were buying rhodium at $11,000 an ounce, went up to $24,000 an ounce and then it came down to $16,000 an ounce, and has remained more or less stable since then (for the last four months). So, at least we know where it could go for now (),” Ashish Gupta, Brand Director, Volkswagen Passenger Cars India, explained.
According to the Society of Indian Automobile Manufacturers (SIAM), continuing supply side challenges such as semiconductor shortages, high commodity prices and high logistics costs have impacted overall industry sales in the industry. SIAM Director General Rajesh Menon said the conflict in Ukraine added to their difficulties as global supply chains are expected to come under pressure.
Naveen Soni, President, Lexus India, said, “We are definitely seeing some lag in container/freight as the cost could be impacted, which could eventually translate into the selling price of the products.”
Passenger vehicle market leader Maruti Suzuki India said the company is monitoring the prices of rhodium and neon gas. A top executive of the company said, “Right now, we can keep an eye on the situation in these countries.
According to the Automotive Component Manufacturers Association (ACMA), on the component industry side, the industry is expecting the war between the two countries to end at the earliest so that things can start again.
“Commodity prices are already high, and there is huge concern about when the government will increase fuel prices, which will again have a huge inflationary impact on overall manufacturing. In turn, this will affect consumer sentiments for auto consumption… Two wheeler buying sentiment is already low, so if this continues it will have an adverse impact and what we are seeing is worsening of the semiconductor problem. can do,” Vinny Mehta, Director General, ACMA, said.
Published on
14 March 2022