Indian automaker Mahindra predicts chip crisis easing

INDIAN auto-maker Mahindra & Mahindra expects shortage of semi-conductors to continue in 2022 but with less severity and is open to raise funding for its business in the electric-vehicle (EV) domain, it said on Tuesday (9).

Mahindra also said that with better availability of semi-conductors, it hopes to maintain its volume-growth momentum from the third quarter onwards, Reuters reported.

Auto-manufacturers around the world have struggled with chip shortages to meet the recovering demand for passenger vehicles in the past two quarters.

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“Q2 was the worst of the chip shortage that we have seen... the shortage cut across the company's entire portfolio,” Rajesh Jejurikar, executive director at Mahindra, was quoted as saying by Mahindra.

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The company, which is chaired by billionaire Anand Mahindra, said it faced a production loss of 32,000 vehicles in the second quarter due to the shortage of chips, a key constituent of modern-day vehicles, but still recorded a nine per cent growth in sales.

Jejurikar said Mahindra has been continuously adjusting its production plans as per availability of chips and expects the crunch in 2022 will not be as severe as 2021.

He also said in a post-earnings call that by 2027, Mahindra plans to launch 13 new sport-utility vehicles and expects EVs to constitute about 20 per cent of its volumes in India.

Anish Shah, Mahindra’s managing director, told Reuters that the company is open to raising money from investors for its EV business and could even set up a separate unit.

“It is not just for capital but also expertise... that will help us grow faster. We see EVs being a major play for us going forward,” he added.

(With Reuters inputs)