Automakers hope for better festive season despite chip shortage lingers on

New Delhi: Leading automakers Maruti Suzuki, Toyota Kirloskar Motor and Mahindra & Mahindra expect sales to be better this festive season compared to last year even though the chip shortage continues to make situation challenging with companies struggling to sustain production schedules.

The festive season, which began with Onam, culminates with Diwali celebrations in November. Automakers have witnessed robust demand so far and are now looking to spruce up supplies to dealers in order to serve customers during the peak of festive period in October.

"At the moment demand looks ok. It is slightly better than last year. If we look at the bookings, enquiries, retails, these are robust. On the supply side of course we may have some adverse effects, and we are monitoring that," said Shashank Srivastava, Senior Executive Director, Maruti Suzuki India (MSI).

The company would intend to build sufficient inventory before Navaratri to serve the spike in demand, but of course it all depends on the semiconductor supply situation, he added. MSI's current inventory level is around 23-24 days while the appropriate level would be 30 days, Srivastava noted. It is going to be a difficult task for the company as it has already announced that its vehicle production in September would be just 40 per cent of the normal output due to the semiconductor shortage. Elaborating on the current market situation, Srivastava noted that the sales this year were expected to be better than last year's, but these were still behind the peak years of 2017-19.