TVS Motor expects swift recovery, better prepared to tackle supply chain issues

The TVS Motor expects a swift recovery in the market, which has been ravaged by the second wave of COVID-19 infections. The company believes it is now better prepared to tackle supply chain issues along with the authorities chipping in with appropriate response to deal with the pandemic.

It has also informed its shareholders that it is well poised for growth with consumers preferring personal mobility options amid the COVID pandemic. TVS Motor Company, in its Annual Report for 2020-21, said that despite the rising second wave of active cases, the company remains confident that adverse impact would be lower and bounce back swifter.

This outlook of cautious optimism is built upon, on one hand, the company’s own supply chain preparedness and on the other, a belief that the administrative responses would be far more measured and targeted, while widespread vaccination drive is expected to break the chain.

“The new long-term practices of social distancing could see consumer preferences change toward personal mobility leading to new demand in the two-wheeler industry,” the company informed its shareholders. “The company is cognizant of this opportunity, and well poised to leverage this opportunity with its superior product offerings across the widest range of personal mobility needs.”

TVS Motor sold 21.6 lakh units of two-wheelers in the domestic market in FY21, as compared to 24.1 lakh units in 2019-20. It said export of two-wheelers were likely to see a growth during the year fueled by consumption growth and stable economic and political situation in all operating geographies. It highlighted that stable crude oil prices will have a positive impact on export market growth in oil dependent economies of Africa and LATAM.

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Moreover, the company’s two-wheeler exports last fiscal stood at 7.64 lakh units, up 12% from 2019-20. However, it listed shortage of semiconductors and containers for exports as major challenges going ahead. “The increase in demand for consumer goods and unexpected growth in the auto sector has led to a supply shortfall of semiconductors and the lead time for these goods has increased from three months to 18 months. These semiconductors form a critical component in two-wheelers too. The shortfall is likely to continue and pose a risk in meeting the production demand,” the report said.

Furthermore, TVS Motor noted that there has been shortages of containers at Indian ports due to continued high traffic container movement from China to North America and Europe post the COVID-19 outbreak. “This clubbed with increased exports from India is posing further shortage of space availability at higher costs. This situation is expected to continue and result in delayed supplies to global customers.”