Chip shortage hits Tata sales; drives in new sub-compact SUV Punch

While Tata Punch has been getting a warm welcome from the masses, the company has been struggling to keep meet the demand due to the global semiconductor shortage.

By:October 19, 2021 10:16 AM
Tata Punch

According to data by Society of Indian Automobile Manufacturers (SIAM), in H1FY21 the share of utility vehicles (UVs) in overall passenger vehicle (PV) sales was 38.4%, but in H1FY22 this rose to 47.1%.

Within UVs, sport utility vehicles (SUVs) are taking the lead. According to calendar year data from carmakers compiled by this author, in CY15 the SUV segment contributed 13.5% to PV sales, and rose to 25.6% in CY19 and 29% in CY20.

According to Tata Motors, this share of SUVs currently stands at about 40%.

Shailesh Chandra, president, Passenger Vehicles Business Unit, Tata Motors, told FE that this rise has been led by numerous new SUVs getting launched in the last 4-5 years. At the same time, he said, there was a void in the SUV segment that the company now aims to fill with the Punch, launched on Monday. “While there has been a proliferation of SUVs in terms of body size, body type and body shape, there wasn’t much choice available for those who wanted to buy a very small SUV,” Chandra said. “The Punch is an SUV for such customers.”

Tata Motors had opened bookings for the Punch on October 4, and while Chandra didn’t share booking numbers, he said the Punch has got “the highest pre-launch bookings amongst portfolio of cars we have today.”

Sales falling

Tata Motors’ domestic PV wholesales have been falling month-on-month—in July 2021 the company sold 30,185 units, in August 28,018 units and in September 25,730 units. Chandra, however, said this isn’t due to demand tapering but more due to supply challenges (as a result of global semiconductor shortage).

“While our demand portfolio hit over 30,000 cars in September, we were able to supply only about 25,000 cars. Like all OEMs, we have also been struggling for the last two quarters as far as chip shortage is concerned,” he said. “The recent surge in Covid-19 cases in Malaysia (one of the world’s top destinations for assembly and testing of chips) added to supply issues.”

While he said there will be some degree of improvement in the near term, “but we are not out of the woods completely, because the demand will definitely remain higher than what OEMs can supply.”

The Punch is priced starting Rs 5.49 lakh (ex-showroom, Delhi), and the company says it is India’s safest car, having earned 5-star safety rating from Global NCAP, the body that tests vehicles on safety attributes.

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