Momentum Expected To Continue Despite Supply Chain Woes

January 31, 2021 0 By boss

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Indian automakers continued to ship more vehicles from their factories than last year, aided by a recovery in demand and a low base even as supply-side constraints persist, according to estimates by four brokerages.

Factory-gate shipments of most automakers for January rose in the range of 3-25% over the year earlier, data compiled from research reports of Motilal Oswal, Emkay Global, Dolat Capital and Prabhudas Lilladher showed. Only Mahindra & Mahindra Ltd. is expected to report an up to 22% year-on-year decline in wholesales.

The automakers, barring Escorts Ltd. and Maruti Suzuki India Ltd., also saw sales rise over the preceding month according to the brokerage estimates.

“Dispatches for Maruti Suzuki and M&M have been affected by supply constraints,” Raghunandhan NL, and Mumuksh Mandlesha, analysts at Emkay Global, said in a separate note. “With good demand and supply chain constraints, the passenger vehicle inventory remains at less than seven days with a waiting period of four-six weeks for fast-selling models.”

The pandemic has fuelled demand for personal mobility. But Indian automakers, recovering from several quarters of slowing sales, have not been able to keep up with supply. A global shortage of microprocessors—the brains of electronic components used to control everything from anti-lock braking to airflow systems of cars—is making a quick ramp-up difficult after Covid-19-led disruption stalled production and sales earlier in the year.

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