China-Taiwan Tussle May Result In Semiconductor Shortage, Says Automobile Dealers Body


New Delhi:

With the potential risk of an escalating dispute between Taiwan and China, shortages in the key raw material for auto manufacturing – semiconductors – are looming again, the Confederation of Indian Auto Dealerships Associations said on Thursday.

The president of the association, Vinkesh Gulati, said that after the war between Russia and Ukraine, the world is now faced with the possibility of a war between Taiwan and China.

“For this reason, a semiconductor shortage looms again as chipmaker TSMC raises the red flag that Taiwan chipmakers would become ‘inoperable’ in the event of war,” Mr. Gulati said.

Hours after US House Speaker Nancy Pelosi left Taipei after a visit that rocked Beijing, live fire drills began Thursday in six identified zones on the island. Pelosi’s visit, which is also the highest visit to the US in more than two decades, has severely infuriated China, and the communist nation has warned the US it will “pay the price.”

As for automobile sales, the total retail sales of vehicles in the month of July 2022 recorded a year-on-year decline of 8 percent. July is generally considered a lean month before the festival season kicks off in August.

Broken down by segment, tricycles and commercial vehicles were the only segments growing 80 percent and 27 percent for the month.

Sales of two-wheelers, passenger cars, and tractors saw lower retail sales, falling 11 percent, 5 percent, and 28 percent, respectively, according to data released by the Federation of Automobile Dealers Associations (FADA).

In July, an irregular monsoon prevailed in most states. While western, central, and southern India in particular faced excess rainfall, the Ganges plains, and eastern India experienced insufficient rainfall, it said.

The erratic monsoon also led to less sowing of Kharif as the area under paddy field fell 13 percent at the end of July. As a result, tractor sales, which showed good growth until a month ago, took a big tumble in July.

The two-wheeler retail run saw weak demand as rural India continues to underperform. This, coupled with high inflation, erratic monsoons, and high operating costs, continues to keep customers at the bottom of the pyramid in check, it said.

The tricycle sector continued to see a recovery in demand, although full recovery to pre-Covid levels is some time away.

It is clear that e-rickshaws are the biggest mover in the segment. The rebound in demand in the tricycle passenger category also showed that Covid is now behind us as passenger movement regains traction.

Commercial vehicle retail numbers continue to show good demand as the government’s infrastructure push helps customers complete their purchases. Apart from that, the beginning of a recovery in demand was also recorded in the bus segment, as educational institutions and offices returned to normal operations.

The passenger car segment is enjoying a dream run as retail sales are already higher than in 2019.

“Even if the July numbers make a small jump, the industry is constantly introducing new models, especially in the compact SUV segment. Also, a better offer in the coming months will help alleviate the fear of customers due to the long waiting times. We also call on all car manufacturers to recalibrate their deliveries according to market demand and avoid pushing low moving stocks,” it added.

As for the outlook, it remains “cautiously optimistic” as the country enters the festival season.

(Except for the headline, this story was not edited by NDTV staff and was published by a syndicated feed.)


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