Toyota SUV sales may skid on gaps in chipset supply
- Supply of vehicles from Maruti Suzuki India Ltd—as part of the alliance with Suzuki Motor Corp—has helped Toyota increase its domestic market share in the premium hatchback and entry-level SUV segment, where it was not present before.
An acute shortage of semiconductor-based critical components is threatening to derail the sales of some of Toyota’s best-selling premium models in India, an executive at the Japanese carmaker said.
Toyota Kirloskar Motor India Ltd, which manufactures a range of popular premium sport utility vehicles (SUVs), has been seeing steady growth in retail sales and bookings in the post-lockdown months. But the shortage of semiconductor-based parts could halt the recovery if the situation persists.
Passenger vehicle manufacturers have been witnessing a sustained increase in retail sales on the back of improvement in economic activity and increased preference for personal mobility to avoid Covid infection. But a drop in semiconductors is leading to delays in supply of vehicles in the market for some companies.
Carmakers around the world are facing a shortage of chipsets due to the pandemic, which has led to chipmakers diverting their production to consumer electronics amid soaring demand.
Among the worst-hit are Toyota Motor Corp., Volkswagen AG, who have seen a substantial cut in production across factories in the last few months.
“The semiconductor issue and low inventory at dealerships will have an impact. If there is a slowdown on the supply side, then you lose out on customers since the ones who are looking to buy under such circumstances will not wait and will go out and buy something else,” Naveen Soni, senior vice-president of Toyota Kirloskar Motor, said in an interview.
“It’s not a great thing to have two or three months’ waiting period for a Fortuner (an SUV). That’s what we are telling our head office—that we need to get these parts as soon as possible so that we can supply these vehicles to our consumers.”
In India, manufacturers who offer diesel powertrains in passenger and commercial vehicles, like Mahindra and Mahindra Ltd, Tata Motors Ltd, Toyota and others, are the ones facing this problem.
As a result, customers have to wait for a couple of months or more for a vehicle. Besides declining supplies of semiconductors, other bottlenecks such as congestion in ports like Singapore, shortage of shipping containers and increased commodity prices could further aggravate the situation.
The sudden drop in the supply of spare parts comes at a time when the Japanese manufacturer is witnessing a slow uptick in demand. Sales of Toyota’s premium vehicles Innova and Fortuner have been gradually returning to normal levels since November, Soni said.
“If we look at only Innova, we got more than 7,000 orders last month, and this is the kind of number we used to do many months ago. So, slowly we are inching up to the 4,000 to 5,000 mark (wholesale), and with healthy pending orders, we will carry forward some of the orders. For Fortuner, we are holding on to around 5,000 orders as we close the month,” he said.
Supply of vehicles from Maruti Suzuki India Ltd—as part of the alliance with Suzuki Motor Corp—has helped Toyota increase its domestic market share in the premium hatchback and entry-level SUV segment, where it was not present before.
Toyota’s wholesale dispatches in the April-January period fell by 33.8% from the year-ago period to 64,058 units, primarily due to the the strict lockdown that forced the closure of factories as well as showrooms during the June quarter. In February, dispatches increased by 36% to 14,075 units.
“If you take a three-to-four-month horizon, then November onwards, the trend is on the positive side, and it’s improving month on month. Last month’s figure (wholesale) was the highest in 14 months. It’s comforting to see that demand seems to be holding on,” added Soni.