New car, SUV sales decline ahead of festive season

After witnessing consistent growth in both June and July 2021, passenger vehicle sales in India have once again taken a hit in August 2021. This time around, carmakers are grappling with the ongoing global semiconductor shortage, which saw them cut production due to unavailability of electronic chips.

More importantly, the semiconductor crisis has compounded at a time when things were beginning to look up for the domestic passenger vehicle industry. The demand for new cars has been growing, but sales continue to be affected due to chip shortages, creating waiting periods as long as eight months on few models, across manufacturers.

Cumulative sales of 10 manufacturers at 2,46,096 units point to a 12 percent year-on-year growth but the industry knows this could have been much more, given that PV sales in July 2021 were 2,64,442 units and the growth was looking good. Here's looking at manufacturer-wise wholesale numbers for August.

Maruti Suzuki India: (1,03,187 units / -8.71 percent)

Maruti Suzuki, the country’s largest carmaker, clocked sales of 1,03,187 units last month, registering an 8.71 percent drop year-on-year, with 1,13,033 units sold in August 2020. This is due to the carmaker taking measures to limit the adverse impact of the semiconductor shortage on its production.

The entry-level duo of Alto and S-Presso went home to 20,461 buyers (August 2020: 19,709/+3.81 percent), while the pack of Wagon R, Swift, Baleno, Celerio, Ignis, Dzire and Tour S saw combined sales of 45,577 units – a notable 26.43 percent year-on-year decline compared to 61,956 units sold in the same month last year.

The UV range, however, registered an uptick with total sales across models like Ertiga, Vitara Brezza, S-Cross, XL6 and Gypsy reaching 24,337 units (21,030/+15.72 percent). The Ciaz sedan almost doubled its figures by selling 2,146 units.

As far as upcoming launches go, Maruti Suzuki is lining up a slew of model updates, apart from the all-new Celerio’s market launch in the coming months.

Hyundai Motor India: (46,866 units/+2.30 percent)

Hyundai, only second to Maruti in terms of sales volume, registered sales of 46,866 units last month, a marginal improvement over the 45,809 units clocked in the previous year. That’s a year-on-year growth of 2.30 percent. On a month-on-month basis however, Hyundai recorded a decline of 2.4 percent with 48,042 units sold in July 2021.

While the company is witnessing unwavering demand for some of its models such as the Creta and i20, it is not insulated from the semiconductor shortage.

In other news, Hyundai has launched the much anticipated i20 N Line in India today, with prices starting from Rs 9.84 lakh (ex-showroom). While Hyundai does not have any new models planned in the short term, its Casper micro-SUV could be launched early next year.

Tata Motors: (28,018 units / +50.77 percent)

Tata Motors' domestic sales were 28,018 units last month, registering a significant 51 percent year-on-year growth over the 18,583 units sold in August 2020. Tata’s EV sales, however, crossed the 1,000-unit mark for the first time with sales of 1,022 units (306/+234 percent). The company also launched its updated Tigor EV with a 306km certified range on August 31.

However, this is still a month-on-month drop of 7 percent, owing to the semiconductor shortage. The company has cautioned severity in the coming months and said in a press statement, “The recent lockdowns in East Asia have worsened the supply situation and hence, Tata Motors is forced to moderate production and offtake volumes in the coming months.”

Mahindra & Mahindra: (15,973/+17 percent)

The home grown carmaker despatched 15,973 units to dealers last month, marking a growth of 17 percent over the 13,651 units that were sold last year. While the company was already getting good traction for its products including the XUV300, Scorpio, Bolero Pik-up and the recently-introduced Bolero Neo, it launched the flagship XUV700 on August 15. This is expected to attract more buyers in the midsize SUV segment with its attractive pricing.

However, although bookings have already commenced, the cars will hit showrooms only in October. Mahindra has also suffered a notable impact due to the semiconductor crisis as the UV maker’s portfolio has more diesels, and it is this fuel type that is suffering more as per FADA. This is due to higher concentration of chips including in the after-treatment system to meet the BS6 emission norms.

Kia India: (16,750 / +55 percent)

Kia India clocked sales of 16,750 units in August, registering a significant 54.5 percent year-on-year growth over the 10,845 units that were sold last year. Kia recently launched the special edition X-Line version of Seltos, with the Seltos itself contributing 8,619 to August numbers. The Sonet compact-SUV sold 7,752 units, with the remaining 379 units coming in from the Carnival MPV.

Kia is gearing up to introduce an all-new MPV for India. This new model (Codename: KY) will see a market launch sometime in early 2022.

Toyota Kirloskar Motor: (12,772 units / +130 percent)

Toyota Kirloskar Motor (TKM) registered total domestic despatches of 12,772 units, which is a 130 percent year-on-year growth as just 5,555 units were sold in August 2020. However, compared to July 2021, sales saw a marginal decline from 13,105 units.

Being based out of Karnataka, TKM was severely impacted during the second COVID-19 wave earlier this year from April through June and is now on a compensation journey. Its updated Fortuner and Innova Crysta continue to witness strong demand in their respective segments, while the Urban Cruiser and Glanza tend to engage with buyers at the lower end of the market.

Honda Cars India: (11,177 units/+49 percent)

Honda Cars India registered sales of 11,177 units last month, which marks a year-on-year growth of 49 percent with 7,509 units sold in the previous year. The company introduced its Amaze facelift in August to create some excitement in the compact sedan space once again. The Amaze comprised 6,591 units of total August sales of the company.

Additionally, the City hybrid is also expected to launch later this year. A much-awaited three row SUV from Honda is under development as well.

MG Motor India: (4,315 units/+51.4 percent)

MG Motor India recorded sales of 4,315 units last month – a notable 51 percent uptick over 2,851 units sold in August last year. Contrary to few other carmakers, even on a month-on-month basis, MG recorded an increase of 2.1 percent as it sold 4,225 units in July 2021. The company says the demand is strong for its entire model range, including the Hector and Hector Plus siblings, Gloster, and ZS EV.

MG even launched new variants of the Hector in August to make the range a little more diverse. Currently, MG is prepping for the launch of the Astor SUV, its fourth model for our market, prices of which will be announced in the festive season.

Skoda Auto India: (3,829 units /+282 percent)

Skoda has commenced its revival stint in the Indian automobile space with the recent launch of its midsize SUV – Skoda Kushaq. The crossover is enabling Skoda grow its monthly sales volumes by a whopping 282 percent. This is evident from its August numbers – 3,829 units – which is a huge bump up from 1,003 units it sold in August 2020.

Apart from this mass-market SUV, the flagship Superb sedan, Octavia and Rapid too have aided Skoda’s August numbers.

Nissan Motor India: (3,209 units /+296 percent)

The Japanese carmaker despatched 3,209 units to dealers – a marked improvement over August 2020’s 810 units when its game-changer SUV – Nissan Magnite – was not part of its domestic portfolio. Nissan too has been severely affected by the semiconductor crisis, as is evident from the month-on-month decline in sales, with Nissan having sold 4,259 units in July 2021.

According to Nissan, the Magnite, that plays in the sub-Rs 10 lakh price bracket and was launched in December 2020, has inched over 60,000 bookings so far.

Growth outlook: sales chip-wrecked?

The semiconductor shortage is bad news for the Indian automobile industry, as it is for carmakers worldwide. Just when the PV market was seeing sustained momentum, growing supply chain issues and unavailability of chips, which are increasingly required to deliver high levels of infotainment and connectivity in vehicles, are proving to be a sales speed breaker.

Most of the top PV players are impacted by the chip shortage and are rejigging their production schedules to ensure their popular, in-demand models are sent to dealers ahead of the festive season which begins this month. Long waiting periods are a deterrence to vehicle ownership, which is also why the used car market is currently witnessing a huge boom.

How long will this chip crisis last is anybody’s guess. But global suppliers like Taiwan’s TSMC have said that it would last well into 2022. So the writing is clearly on the wall - a demand-supply mismatch that is bad news for the Indian auto industry - more so when consumers are ready and willing to spend during the festive season.