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Mahindra To Reduce Production Because Of Chip Shortages

Mahindra production crisis

The global semiconductor crisis has worsened just before India’s festive season, causing severe delays in vehicle production in August 2021. The crisis will last until September when the latest announcement from Maruti Suzuki is a massive 60% cut in chip production. Mahindra has now announced a similar move, citing the semiconductor crisis as a factor in their decision.

Mahindra is planning to reduce production in September

“There is still an increase in the supply shortage in the Automotive Division of the enterprise due to the lock-outs in Covid in certain parts of the world,” said Covid in a regulatory report. As a result, in September 2021, the company will observe ‘No Production Days’ of around 7 days in its automotive division plants, resulting in a 20-25 percent reduction in production volumes. The drop in production volumes will have an impact on revenue and profitability. To mitigate the impact, the company is implementing a number of cost-cutting measures.”

The semiconductor crisis, on the other hand, has had no impact on Mahindra’s upcoming flagship XUV700, which is on track for production and launch. Mahindra will announce the start date for bookings in the near future. Mahindra’s tractor and commercial vehicle operations are also unaffected by the crisis.

Mahindra SUVs are currently on backorder

Mahindra has recently experienced a surge in demand for some of its models, which has resulted in lengthy wait times due to the chip crisis. The company announced in early August that it had nearly 90,000 bookings for five vehicles: the Thar, XUV300, Scorpio, Bolero, and Bolero Pik-Up.

While the Thar has a near-10-month wait time and over 39,000 reservations, the XUV300 has over 10,000 reservations and a two-month wait time. The Scorpio had over 6,000 bookings with a 45-day waiting period as of August, while the Bolero had over 4,000. In the first quarter of FY2022, the Bolero Pik-Up, which is seeing strong demand due to the boom in e-commerce and demand for last-mile deliveries, received over 30,000 bookings.

The auto industry will miss out on holiday sales

The ongoing chip crisis has come at an inopportune time for the Indian auto industry, which was hoping to make up for lost sales during the upcoming festive season, which starts this month.

Vinkesh Gulati, president of the Federation of Automobile Dealers Associations of India (FADA), recently told Autocar Professional that the chip supply chain issue is expected to worsen as demand rises during the festive season. “We are approaching the holiday season, which is expected to provide a boost. However, in the PV industry, the supply chain is becoming a major issue.”

Most popular models have a waiting period of two to eight months on average across manufacturers, but diesel cars have been the hardest hit. “Manufacturers with a high diesel presence are being impacted more, but almost all manufacturers are moving in that direction,” Gulati said.

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