A sustained high festive sentiment in India drove India’s automobile wholesales in October 2023 to 23,62,534 units, with passenger vehicles and three-wheelers recording double-digit growth last month. Passenger vehicles mustered dispatches of 389,714 units, a y-o-y growth of 15.87 per cent which is the highest-ever sales of October. Three-wheelers displayed the best-ever October performance with sales of 76,940 units in October 2023, a y-o-y growth of 42.07 per cent, the Society of Indian Automobile Manufacturers (SIAM), said on Friday.
The SIAM data shows the two-wheeler segment continuing to show improvement with 18,95,799 units sold, which was higher by 20.11 per cent y-o-y. The total production of PVs, three-wheelers, two-wheelers, and quadricycle in October 2023 was 26,21,248 units. The auto sector’s total sales stood at 23,62,534 units, a year-on-year growth of 20 per cent compared to 19,68,938 units sold in October 2022. Vinod Aggarwal, President, SIAM credits the encouraging growth momentum for the industry to sustain conducive policies of the Government and the ongoing festive season.
A CRISIL report observes vehicle makers veering towards normalcy as the chip shortage eases. The global shortage of semiconductors, or chips, which had hobbled automobile production and sales in India through fiscals 2021 and 2022 and a large part of fiscal 2023, is easing, with supply-chain glitches being addressed and improved predictive demand forecast enabling better production schedules. Crisil reports that demand-supply dynamics are expected to be more balanced by fiscal 2026, with additional global manufacturing capacities set to become operational.
According to Anuj Sethi, Senior Director, CRISIL Ratings, the chip shortage faced by Indian PV makers is easing, with current availability at 85-90 per cent of the total requirement. “The production loss on account of the chip shortage, which had halved to 300,000 PVs on-year in fiscal 2023, is estimated to have further declined to under 200,000 PVs by the end of September 2023,” points out Sethi.
Broadly, the computer and communication equipment (C&C) segment consumes 63 per cent of chips produced, followed by automobiles 13 per cent. Passenger vehicles (PVs) consume 1,500 chips on average, the highest among all automobile types. The chip requirement increases as more advanced electronic features are incorporated.
Electric PVs use almost twice as many chips as internal combustion engine (ICE) PVs. For the record, though most PV makers are currently operating at near optimal capacity utilisation due to stronger-than-anticipated demand, new orders to be serviced remains high at 700,000 at the end of September 2023, despite chip availability easing considerably.
In the Indian context, demand for chips will continue to increase over the medium term, driven by the gradual rise in EV adoption and growing demand for advanced feature-laden ICE vehicles. India currently meets its chip demand through imports and the government has allocated USD10 billion for the development of the semiconductor ecosystem in a bid to cater to rising demand and reduce import dependence. That said, given India’s nascence in the field, successful joint ventures with established global players and commissioning of facilities will be crucial.”