Car companies rev up on chip supplies, July dispatches to hit a record

It is a significantly high number for what usually is a lean month. The previous peak of 334,000 units was recorded in October of 2020. In the past five years, automakers billed between 200,000 and 299,000 units in July, with the highest in 2017. Supplies in the Indian car market had for almost a year been unable to meet increasing demand for personal mobility, creating a large backlog. Automakers had to cut down on production due to a shortage of semiconductors. With supplies of chips improving, these companies are now increasing output.

Shashank Srivastava, senior executive director at market leader

, said the dispatches this month would likely be among the highest seen in the industry, though retail sales might not be that high.

“Dispatches can’t be a reflection of real demand and that has been the case for the last one year or so in the supply-constraint environment. In July, most of the carmakers are satiating the pending bookings,” he said, without disclosing any numbers. “While new launches continue to invite higher bookings, the older models have started witnessing some kind of softening due to macroeconomic parameters of interest rate, inflation, fuel prices, among others. In Maruti’s case our position has strengthened due to two new SUVs,” he added.

India’s top five carmakers are expected to contribute 80-83% to the total volume of the industry for July 2022, and the largest carmaker’s share is estimated to be 41-43%. In 2022, this is the fourth month when dispatches from factories have been more than 300,000 units. The average volume for the past one year was 277,454 units.

So far in FY23, the average wholesale number is around 314,000 units a month and if this trend sustains, it will translate into a total volume of 3.7 million vehicles this year – an expansion of 24% from 2021. The light vehicle output in India is set to cross its previous peak in 2022, said S&P Global on the back of sustained demand.

Gaurav Vangaal, associate director, light vehicle production forecasting, at S&P Global Mobility said with the improvement in semiconductor supply, the consultancy firm had raised its market growth forecast for 2022 to 17-20% from 13%. “The strong backlog in the domestic market and increased export numbers allowed India to sustain the robust numbers. H1 2022 posted growth of 3% in comparison to H1 2018, and we expect CY 2022 will be the best ever year for Indian light vehicle production,” he added.

Among the major light vehicle producing nations, India is the only country to post double-digit growth for consecutive years.