Auto dealers lose over 20% sales due to semiconductor shortage: FADA

Federation of Automobile Dealers Association said that a survey conducted by them showed that 50 per cent of passenger vehicle dealers lost more than 20 per cent of sales due to non-availability of vehicles.

New Delhi: The global semiconductor shortage continues to trouble the domestic automobile industry with automakers struggling to meet the growing demand and automobile dealers are losing sales due to high waiting periods.

The problem is acute in the passenger vehicle segment, said the Federation of Automobile Dealers Association (FADA) in a statement shared with ETV Bharat on Tuesday.

“Our survey showed that 50 per cent of passenger vehicle dealers lost more than 20 per cent sales due to non-availability of vehicles,” the statement reads.

While the FADA has been pointing out a drop in the factory output due to a semiconductor shortage for over two months, this is for the first time the dealers’ body came out with specific details.

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On being asked what led to the latest trouble for the automakers, Vinkesh Gulati, President, FADA said that the industry ‘misjudged’ the post lockdown demand.

“Industry’s under estimation of post-covid rebound along with chipmakers prioritising higher-volume and more lucrative consumer electronics market has led to the problem,” he told ETV Bharat.

Echoing similar views, EY India said that high demand from the consumer electronics industry has resulted in shortages for the automakers.

“Currently, automobile OEMs have started to witness a steady increase in vehicle demand due to the revival of car sales. However, the semiconductor industry is finding it difficult to address the increasing demand as it also caters to other industries like IT, consumer electronics, mobile and medical equipment,” said EY India last month.

While a whole range of businesses was shut during the pandemic last year, there was a sudden spike in demand for televisions, mobile phones, entertainment systems, laptops, etc as people were forced to stay at home due to extended lockdowns resulting in high demand for semiconductors.

Semiconductors are used in the electronic control units (ECU) of cars, especially premium passenger cars.

Media reports suggest that global auto majors like Ford, Nissan and Toyota among others announced production cuts last month and automakers in India will follow the suit as the country is heavily dependent on imported semiconductors.

As per an estimate, Indian automakers import electronics and related systems worth Rs 30,000 crore per annum.

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FADA urges the Centre to step in

As the waiting period for passenger vehicles continues to remain as high as 8 months due to semiconductor supply issues, FADA requested the Central Government to use its good offices to help the industry.

“We urge the Union Government to hold diplomatic discussions with countries manufacturing semi-conductors (Taiwan & other similar countries) so that the momentum which was built thus far in Auto sales is not lost and Auto Industry continues to fuel the recovery process,” said Vinkesh Gulati.

He further said that the timely action by the government would protect the passenger vehicle segment that sells over two lakh vehicles per month.

“If the issue is not solved urgently, the demand may further shift to pre-owned vehicles and in turn affect the passenger vehicles growth,” he noted.

(Shravan Nune)