Car sales grow 27% in ’21

Led by SUVs and new models, the passenger vehicles industry staged a spirited comeback in 2021, despite challenges of semiconductor shortage and a second wave of coronavirus, as sales grew 27% and crossed the psychological 30-lakh-unit mark for only the third time in history.

Despite severe production constraints and a long delivery backlog (estimated at 7 lakh units), car companies sent 30. 82 lakh units to dealerships in calendar year 2021, against 24. 33 lakh units in 2020. The rate of growth was strong due to a low base as 2020 was the first year to have been impacted by the virus outbreak amidst a period of tremendous uncertainty.

Passenger vehicles sales crossed the 30-lakh mark for the first time in 2017 where total sales stood at 32. 3 lakh units. In 2018, the industry had closed at 33. 95 lakh units, before slipping down in 2019 to 29. 62 lakh units.

For Maruti Suzuki, the country’s largest carmaker which was also impacted severely by the semiconductor crunch, sales stood at 13. 65 lakh units in 2021, against 12. 14 lakh units in 2020. However, this figure was a far cry from the 17. 31 lakh units it had hit in 2018.

Maruti’s rival Hyundai, however, reported a 19% growth in its 2021 domestic numbers at 5 lakh units against 4. 2 lakh units in 2020. The company has also been hit by the shortage of semiconductors with the delivery backlog of vehicles such as Creta and Venue SUVs at over 1lakh units.

Shashank Srivastava, Sales & Marketing Director at Maruti, said companies have initiated steps to tackle the semiconductor shortage, though the situation remains fluid. “From a low production level which was at 40% of the capacity, we could scale up to 83% by November, and thereafter 87% by December. We are hopeful that this progress will be maintained” Srivastava told TOI.

However, he said that the situation on the demand front still remains fluid. “It’s difficult to forecast. There are factors which still make the situation uncertain. These include availability of semiconductors, the growth of the economy, and how the Covid situation pans out. ”

The industry is also grappling with high input costs, which has seen vehicle prices go up a few times over the past few months. Srivastava said a fresh round of price hikes will happen in the next few days. New models also led to the charge in 2020, and these included vehicles such as the XUV7OO and the Thar for Mahindra & Mahindra. The company is grappling with a deluge of bookings, which has seen a waiting list that runs into well over a year for some variants. “The issues around semiconductor-related parts continue to be a challenge for the industry and is a focus area for us,” Veejay Nakra, CEO of M&M’s automotive division, said.