The country's Union Budget that dominated the headlines this week thankfully brought no negative surprises for the auto sector. However, the sector continued to suffer the impact of semiconductor supply shortages that began in November. Let's take a quick look at what transpired in the sector this past week.
Tata Motors PV division posts Rs 11,173 crore loss
The passenger vehicle (PV) division of piled up loss of Rs 11,173 crore as at end of June 2020. The division's valuation has been fixed at Rs 9,417 crore, a notice to the company’s shareholders stated.
The PV division is being hived off into a separate entity so the company can sell its stake to a strategic partner. The PV division also controls the electric vehicle business unit of Tata Motors.
Govt announced the launch of a scrappage incentive scheme
Union Budget 2021 did not offer much to the automotive sector but industry stakeholders were happy there were no nasty surprises, as a few earlier Budgets had.
Finance Minister Nirmala Sitharaman announced the commencement of the long-pending scrappage scheme for obsolete vehicles.
Two-wheeler sales grew 4 percent in January
India's two-wheeler industry recorded an increase of 4 percent during January to 1,236,536 units as against 1,186,750 units sold in the same month in 2020.
Hero MotoCorp, India’s largest two-wheeler manufacturer, saw 3 percent fall in domestic sales during January while Honda Motorcycle and Scooter India (HMSI), the country’s second biggest two-wheeler maker, said it recorded an 11 percent increase in domestic sales.
Car sales jumped 24 percent in January
India's top-ten carmakers recorded a rise of 25 percent in January volumes to 293,025 units as against 234,641 led by a continued surge in demand for new and existing products.
Maruti Suzuki recorded a fall of nearly 1 percent to 139,002 units. Hyundai Motor India clocked 24 percent growth in domestic wholesales for January at 52,005 units as against
Hero MotoCorp detailed sales strategy for Harley-Davidson
Within months of signing a distribution agreement with Harley-Davidson, Indian motorcycle manufacturer, Hero MotoCorp announced it will set up a dedicated vertical for the distribution of motorcycles from the American manufacturer.
Hero MotoCorp, on February 3, announced that separate dealerships will be set up for the distribution of Harley-Davidson bikes. This division will be headed by Ravi Avalur who joined Hero MotoCorp from Cooper, an engines and engine manufacturer.
Mahindra recalled Thar to replace camshaft
Utility vehicles major Mahindra & Mahindra (M&M) recalled 1,577 units of its SUV Thar with diesel powertrain to replace faulty camshaft, an engine part.
The Mumbai-based auto major said it would undertake proactive inspection and replacement of camshaft on a batch of 1,577 units of Thar diesel variants, manufactured between September 7 and December 25, 2020.
Semiconductor shortages continued to bite hard
Semiconductor supply crunch continued to plague the industry. Some companies such as India's sports utility vehicle specialist Mahindra & Mahindra (M&M) remained more affected. Supplies of the company's latest product Thar, which it claims to be a runaway success, has been marred due to the semiconductor shortage.
The Mumbai-based company sources its semiconductors, a critical component used for setting up software-based commands for the vehicle, exclusively from German auto parts giant Bosch. Thar and some other of M&M’s models use these semiconductors.
Senior executives of the company said on February 5 that the supply issue will continue to remain disrupted through the next 3-4 months. “We do not have any other supply. It is just the shortage of semiconductors”, said Rajesh Jejurikar, executive director, M&M said to analysts after the company announced their December quarter results.
The semiconductor crisis, though, has come at a time when M&M had finally found a ‘hit’ model. The company is unable to capitalise on the demand for Thar because of the shortages in semiconductors.
The Thar has garnered bookings of more than 35,000 since its launch some months ago. But, the waiting period has now extended to more than six months. This means any order placed now will be ready for delivery only around Diwali.
But what about M&M’s rivals? Maruti Suzuki, Hyundai and Tata Motors are also facing semiconductor shortages but so far, there has not been much impact on their production. They source the vital part from other manufacturers.
“We are watching the situation closely but can say confidently that the shortages will not impact our production at least for a month”, said a senior executive of Maruti Suzuki, India’s largest manufacturer of passenger vehicles at an analyst conference call.
“We have seen how semiconductor shortage has impacted the automotive industry. But the situation for Tata Motors is not as severe”, said a senior official of Tata Motors at a recent media call.