MG Motor India: Car manufacturers operations, sales will stabilize next year: MG Motor India


Even though pent-up demand immediately increases car sales in India, operations and sales are only expected to stabilize next year. A global semiconductor shortage and rising input and shipping costs continue to pose challenges for automakers, MG Motor India said.

“While passenger vehicle sales are expected to accelerate over the next few months, there are 2-3 serious challenges affecting the industry,” Rajeev Chaba, president of MG Motor India, told ET. “The global semiconductor shortage is expected to continue for some time to come. Shipping rates have gone up, derailing production schedules and increasing costs. ”

Material prices have risen, affecting operations and cost structures.

“The prices of raw materials – whether metals, copper or steel – have skyrocketed, creating an artificial shortage of materials. This puts pressure on operations, ”said Chaba.

Operations are only expected to stabilize in the coming calendar year, he added.

Meanwhile, although sales in the passenger vehicle segment are expected to increase this year, disruptions from the second wave of Covid are expected to cause overall volumes to drop.

“Passenger vehicle sales have fallen by almost a third over the past two years. Previously, the industry expected growth of 35-40%, on a low basis, and hit volumes seen in 2018. The second wave of the pandemic dashed those hopes. Volumes will continue to increase from last year, but in the range of 17-20%, ”said Chaba.

Sales of passenger vehicles in the local market fell 13% to 2.96 million units in 2019, and again fell 18% to 2.43 million units in 2020. Up to 3.39 million units passenger vehicles were sold in 2018.

However, with sales volumes negatively impacted in the two months leading up to June, vehicle purchases are expected to accelerate in the coming weeks, driven by pent-up demand. Chaba said, “From August, we need to see more participation from new consumer groups for sales to increase. A lot of people were affected by the second wave. If there are confidence-building measures in place, the number of cases remains low, vaccinations increase, these people can convert and start shopping. ”

MG Motor India is increasing production every month to meet potential demand. The company expects to outperform the market and grow by around 70-75% in the year 2021. MG Motor India sold 28,162 cars in India in 2020, accounting for 1.2% market share and overtaking automakers like Volkswagen, Skoda, Nissan and FCA which have been in the market for over a decade.

To boost volumes, the company plans to launch a mid-size SUV that is expected to hit the roads in the fourth quarter of the calendar year. The new vehicle will compete with brands like Hyundai Creta and Kia Seltos. Also on the cards is an electric vehicle of less than Rs 20 lakh, which is expected to be launched within the next two years.

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