(Bloomberg) — India’s automaker association warned the semiconductor shortage will continue to disrupt production even as vehicle sales recovered last year.
“The shortage is expected to continue for more time as new investments in semiconductor will take a long time,” said Kenichi Ayukawa, president at Society of Indian Automobile Manufacturers. “For the sustainable growth of the industry, there is a need for both demand improvement and easing of supply chain challenges.”
India’s total vehicle sales rose 6% to 18.5 million units last year, according to the association. Sales of passenger vehicles, which include cars and SUVs, jumped 27% to 3.1 million last year. Two-wheeler sales rose to 14.5 million from 14.3 million in 2020.
Sales improved last year from 2020 when the government mandated strict stay-at-home measures to curb the spread of Covid-19, and factories and dealerships were shuttered.
The chip shortage has affected supplies of components such as engine control units and vehicle information systems, said Ayukawa, also chief executive officer at India’s top carmaker Maruti Suzuki India Ltd. In addition, a surge in raw material costs has forced carmakers to hike prices. Entry-level vehicles have become expensive due to the “steep” increase in steel prices, and stricter emission and safety regulations, he said.
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