Passenger car sales slide globally

Due to the crippling shortage in semiconductor chip, passenger car sales declined worldwide in October. While the Covid-19 faced major challenges, the global automotive industry is now well aware of the unprecedented shortage of semiconductor chips. It is an important component of modern automobiles and many home appliances. The impact of this shortage is not uniform, but it is everywhere.

Major manufacturers in the US saw sales decline by varying margins last month vis-a-vis figures from the same month in 2020. The prediction was for overall car sales to come down by 20% but individual OEMs reported different figures. “Every automaker has been struggling. There's some incremental improvement happening over the last month or so but we are actually talking very marginal improvement," Garrett Nelson of investment research firm CFRA said. China Automobile Dealers Association (CADA) has estimated auto sales in the month of October would be down by nearly 12%. The Chinese economy has shown signs of a slow down and there are concerns in China over two key sectors - real estate and auto. And any production hits will have a direct impact on overseas markets as well because facilities here serve as base for OEMs exporting to other countries.

It has been tough going for automakers across Europe with several months of slide reported. Such has been the situation that prices of pre-owned vehicles have, in some cases, shot beyond the price of its brand new version in the UK. There are just not enough new vehicles to meet with the demand in many countries in Europe. Sales of new vehicles here fell by 21% to 59,044 units. Sales in France too have slid by 31% with 118,521 units sold last month. It was the same sorry tale in Germany as well where new car sales fell by around 34% last month. The challenge is real and being felt in many other countries in the continent.

In India also situation remain the same. Maruti Suzuki and Hyundai - two of India's biggest players in the passenger vehicle segment, reported big fall in October sales. Others are hardly faring much better. Much like in many other parts of the world, demand remains rather strong but production and supply-related issued - caused primarily by parts' shortage and rising input costs - have come as a double blow.