The passenger vehicles industry, led by SUV, made a come back in 2021 with sales growing 27%. The automobile industry also crossed the 30-lakh unit mark, for only the third time in history, despite the semiconductor shortage and second wave of COVID-19 infections.
Car companies overcame severe production constraints and a long delivery backlog. They sent 30.82 lakh units to dealerships in calendar year 2021, against 24.33 lakh units in 2020. Industry experts say the growth rate was strong due to a low base as 2020 was the first year to have been impacted by the pandemic leading to a period of tremendous uncertainty.
Passenger vehicles sales, as per ToI report, had crossed the 30-lakh mark for the first time in 2017, when total sales had stood at 32.3 lakh units. The industry in 2018 closed at 33.95 units and slipped to 29.62 units in 2019.
Shashank Srivastava, Sales & Marketing Director at Maruti, told ToI that companies have initiated steps to tackle the semiconductor shortage. However, the situation remains fluid. “From a low production level, which was at 40% of capacity, we could scale up to 83% by November, and to 87% by December. We are hopeful that this progress will be maintained as we move ahead.”
However, Srivastava highlighted that demand too remains fluid. “It’s difficult to forecast. There are factors that still make the situation uncertain. These include the availability of semiconductors, the growth of the economy and how the COVID situation pans out.”
The Maruti executive noted that the industry is also grappling with high input costs. This has led to a spike in prices. Srivastava believes a fresh round of price hikes will happen in the next few days.
Veejay Nakra, CEO of Mahindra & Mahindra’s automotive division, said the company is also grappling with a deluge of bookings, which has seen a waiting list that runs into well over a year for some variants. He highlighted that new models also led to a charge in 2020, including vehicles such as the XUV700 and the Thar. Nakra noted that the issues around semiconductor-related parts continue to be a challenge for the industry.