Semiconductor shortage could impact auto wholesale sales August-September: report

The global semiconductor chip shortage is hurting auto production and could impact wholesale sales from August through September, even as demand recovers well from the second wave of the pandemic, according to a report on Tuesday.

In August, passenger vehicle and tractor registrations were up 41-44% from the same period of 2019, and truck registrations are also improving despite a 15% drop in the months of 2019. ‘August 2019, financial services firm Jefferies said in its report.

However, two-wheeler registrations fell 19% in August compared to the same period of 2019, he said.

Noting that chip shortages are hurting production and are expected to impact wholesale sales from August through September, Jefferies said that “companies such as Maruti, Bajaj and Royal Enfield saw increased impact in the quarter of September “.

The recent lockdown linked to the pandemic in Malaysia could add to the constraints, he added.

Semiconductors are silicon chips that perform control and memory functions in products ranging from automobiles, computers and cell phones to a variety of other electronic items.

The shortage of such a crucial component has impacted the automotive industry around the world as well as other industries, forcing them to cut back on production.

The use of semiconductors in the automotive industry has increased worldwide in recent times with new models featuring more and more electronic features such as Bluetooth connectivity and driver assistance systems, navigation and electric hybrids.

Passenger vehicle registrations fell sharply by 29% in the first quarter of this fiscal year over the same period of 2019, as the second wave of COVID took its toll, Jefferies said in the report, adding that “demand s ‘has recovered well with registrations, compared to 2019, up 24% in July and 41% in August. ”

Online search trends for major original equipment manufacturers (OEMs) dipped slightly in the second half of July, but are picking up again, indicating a surge in consumer confidence, he said.

Although demand for two-wheelers is also recovering from the sharp 46% drop in registrations in the first quarter of fiscal 22 compared to 2019, registrations are still 19% lower than 2019 in July-August and the segment is lagging behind in the recovery, the report notes.

However, website visits for two-wheeler portals are on a gradual upward trend, suggesting improving consumer sentiment, he said.

Tractors continue to experience strong growth with July-August registrations up 44% from 2019, and demand for trucks is also picking up sequentially with August registrations just 15% lower than in August. of 2019, according to the report.

The report says there has been no respite from rising steel prices, with Asian steel prices holding up despite the sharp drop in iron ore, adding that the price of l Indian steel is at a record high of Rs 67.5K / tonne (5 percent above the June quarter average).

The spot price for aluminum at $ 2,674 / tonne is also 12% above the June quarter average.

“However, we believe that most of the pressure on gross margins should be reflected by the September quarter and that automakers should post sequentially better margins in the second half of the current fiscal year. particularly as volumes recover, ”he said.

He also noted that slowing credit growth has raised concerns about demand for metals in China, although a seasonal recovery in construction and infra-stimulants should provide a positive wind while potential cuts in production could also tighten supply in the second half of calendar year 2021.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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