How is the chip shortage impacting the two wheeler industry?

chip shortage

According to FADA, the causes for dropping sales in the four-wheeler and two-wheeler divisions are distinct. The rural portions of the country continue to have a poor buying attitude in the two-wheeler market. On the other hand, the four-wheeler industry is facing the brunt of chip shortage, despite the fact that demand for new cars remains high.

Since 2019, the automotive sector has been experiencing a sales decline. Factors such as BS6 emission standards, COVID-19, and others hindered car sales as buyer sentiment remained poor. However, since mid-2021, the country’s purchasing sentiment for several car categories has improved. But has this resulted in increased sales? According to the Federation of Automobile Dealers Associations, this is not the case. According to FADA, automobile sales in India fell 9.21% last month compared to February 2021. Two-wheeler sales in India fell 10.67% last month, from 11,00,574 units in February 2021 to 9,83,358 units. In terms of four-wheeler sales, they fell from 2,58,337 in February 2021 to 2,38,096 last month.

Last month, sales of passenger cars, two-wheelers, and three-wheelers were weak as a chip shortage disrupted productivity throughout the local industry and manufacturing centres. Last month, 262,984 passenger vehicles were sold in the local market, representing a 6.5% decrease from the 281,380 units sold the previous year.

If Tata Motors’ volumes of 39,981 passenger vehicles were included, the drop would have been slightly smaller at around 2%.

On the other hand, two-wheeler manufacturers continued to struggle as consumers avoided making purchases, particularly at the beginning level. In February, two-wheeler sales fell 27% to 1,037,994 units. While scooter sales declined 26% to 344,157 units last month, motorcycle sales dipped 28% to 658,009 units over the same time.

Aside from the low supply of chips, which delayed manufacturing, a rise in vehicle acquisition costs owing to the adoption of new rules, high raw material prices, and logistical expenditures also hurt industry sales.

The worldwide chip shortage has continued to wreak havoc on the Indian car sector. Key manufacturers such as Maruti Suzuki, Hyundai, Toyota, and Honda reported declining wholesales for February. On the other hand, Tata Motors, Mahindra and Mahindra (M&M), and MG Motor saw a boost in sales.

Also Read, 5 Best Bike Festival in India to Make Amazing Memories

Hero MotoCorp, the two-wheeler market leader, suffered a 31.5% drop in domestic sales to 3,31,462 units. “With a substantial reduction in the number of COVID-19 cases and the economy gradually opening up with various other encouraging indications, such as lessening lockdown limitations and the reforms outlined in the FY’23 Union Budget,” the business added.

Honda Motorcycle and Scooter India witnessed sales fall to 3,12,621 units, with 2,85,677 domestic sales, compared to 411,622.

Domestic two-wheeler sales for Chennai-based TVS Motor were 173,198 units, compared to 195,145 units. “The scarcity of chip has hampered the development and selling of luxury two-wheelers.” “We are cautiously optimistic that semi-conductor supply will increase in the coming months,” the business stated.

Similarly, Royal Enfield sold 52,135 bikes in the United States, a decrease from 65,114 motorcycles sold at the same time the previous year. “Supply chain constraints due to a chip shortage persisted during the month. Royal Enfield is assiduously working with its supplier ecosystem to resolve the same,” the company said, adding that international sales continued to rise, with the company reporting a 55% increase in exports.

The continuing Russia-Ukraine situation is projected to have an additional impact on Indian automotive sales. Russia is a major producer of rare-earth metals, notably palladium, which is required for semi-conductors. On the other hand, Ukraine is a major supplier of neon gas, which is utilised in the production of semi-conductors. The battle between the two countries will have a negative impact on semi-conductor supply. This fight is also expected to raise gasoline costs in the country, worsening the country’s car sector’s problems.

FADA President Vinkesh Gulati stated, “The two-wheeler market is exhibiting no signs of revival as Bharat continues to be a thorn in its side. With acquisition costs rising all the time, the volume of inquiries has remained low. As corporations and educational institutions continued to operate from home, metropolitan demand suffered. Even though the PV industry experienced several launches and a minor increase in supply owing to improved manufacturing, it was insufficient to fulfil consumer demand. As a result, the vehicle waiting period stays unchanged from the previous several months.”

Karan Kapoor

Karan Kapoor

62 articles published

Karan Kapoor is a motorhead and a big time muscle car enthusiast. His Body functions on a 7L V8, and he trains it to become a W16. He tends to stay in the Fast Lane and sometimes is a little furious about it too. From Maruti to Ferrari, his love of cars is not hindered by price but specs. For 2 Wheels he loves choppers and cafe riders over sports bikes His love for travel is also paved by the roads, and long journeys that he finds more intriguing than the destination. His love for speed is halted by the legality of NOS in India. Give him 2 Wheels or 4. He knows how to handle 'em all.