“Shortages of containers, shavings, ships affecting stocks, deliveries and longer waiting times”
“Shortages of containers, shavings, ships affecting stocks, deliveries and longer waiting times”
Uncertainties in the automotive industry appear to have increased over the past three years, observed Vikram Pawah, President of BMW Group India.
The pandemic hit the industry in 2020 and the next year saw a huge shortage of semiconductors. Now in 2022, while COVID and chip crunch are still ongoing, geopolitical situations have created logistical nightmares. In addition, there is a shortage of containers and ships that is constraining the supply chain overall, Mr Pawah said.
“Let’s look at the last three years,” he said. “In 2020 we faced a COVID crisis and in 2021 semiconductor shortages came along. In 2022 we still have COVID in many parts of the world and the chip crisis continues. In addition, we have the geopolitical situation that causes some logistical nightmares,” he said.
Container shortages and ship shortages created a lot of uncertainties for the industry as the scenario affected shipments and scheduled delivery, he added.
On the outlook, he said the auto industry in general is in a “very dynamic environment” beset by chip and ship shortages, geopolitical challenges, logistical problems and a phenomenal increase in raw material costs. On the positive side, post-COVID demand has been very resilient.
Mr. Pawah stated, “Premium demand is quite robust and this is the aftermath of COVID. Customers used to be conservative. Post-pandemic, their expectations, mindset, aspirations and buying behavior have changed, which is reflected in sales and bookings.”
Regarding taxation, he said that statistically, India is probably one of the most heavily taxed countries as far as the premium or luxury automobile industry is concerned.
“Today, if you look at the retail price of a luxury car, 60% of that is taxes and duties. Therefore, it is very difficult for us to make the customer understand why something that costs 30,000 euros in Europe costs 45,000 euros in India,” he explained.
Some price differences should remain, but why should the differences be so big, almost double, he asked.
“This has created a market distortion that discourages customers from adopting the latest technology products in India,” he explained
