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auto | IST

Semiconductor shortage will impact till June-end: M&M

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CNBC-TV18’s Parikshit Luthra spoke to Rajesh Jejurikar, Executive Director, Automotive and Farm Equipment Sector at M&M, to talk about the outlook for the automotive demand for this fiscal and issues arising because of the shortage of semiconductors.

Mahindra & Mahindra (M&M) sold 15,391 passenger vehicles in February this year, this was driven by a 44 percent increase in utility vehicle sales.
CNBC-TV18’s Parikshit Luthra spoke to Rajesh Jejurikar, Executive Director, Automotive and Farm Equipment Sector at M&M, to talk about the outlook for the automotive demand for this fiscal and issues arising because of the shortage of semiconductors.
Jejurikar said, “We have seen very good momentum on the demand side on our auto brands through the last 6-8 months ever since the lockdown got lifted and we are seeing very good demand in all the other brands. We have unfortunately not been able to fully leverage this opportunity because of supply challenges."
Talking about the shortage of semiconductors, he said, "In February, though our passenger vehicle SUV segment grew by about 40 percent, we were still impacted by the availability of electronic control units (ECUs) in the same period. We ended up getting about 40 percent lower than our actual receipts of ECU in January. So in February, we saw a deterioration; clearly, this was a dampener.”
He added, “We are hoping March would come back at least to January levels. Unfortunately, we are worst affected than others in this case because there is one specific supplier in Malta who makes this semiconductor chips who is worse affected than the industry average.”
Speaking about diversifying the supply chain, Jejurikar said, “It is not easy to diversify the supply chain in these kinds of products at a short notice. We do believe that our current supplier will come out of this in the next few months. We think the issue will remain at least for the next quarter, i.e., the end of June, at the levels that we are seeing right now January-March levels, we hope not February because February was really bad from an availability point of view and then things should start easing out for us post-June.”
For full management commentary, watch the video.