Semiconductor shortage problem and supply chain constraints that have plagued the auto industry are unlikely to be resolved this year and the situation may not improve until 2023, says Managing Director and CEO of Mercedes-Benz India, Martin Schwenk.
While demand for the company’s products continues to be buoyant with the increase in the size of the order book, he said global economic uncertainties and the geopolitical crisis impacting India are cause for concern, thus putting a question mark on how things would go in the next six years. at 12 months.
”The supply situation, unfortunately, has not improved. We still have semiconductor shortages. We have shipping and port congestion. We have missing components in our production. So I would say, unfortunately, the future also remains very difficult to predict,’ Schwenk told PTI in an interview.
Elaborating on the impact of the issue, he said: ‘We still have significant supply constraints across our chain which is limiting us from delivering as many cars as we would have liked at this time. This still puts us in long waiting periods for most of our models. This is the unfortunate situation at the moment. Stressing that this won’t change over the course of the year, Schwenk said, “I don’t see it getting better. If anything, then maybe next year, but not this year. I don’t foresee any improvement. Commenting on the global economic uncertainties and the geopolitical crisis, he said: “The level of instability has not improved. Things have even become more volatile, even compared to, say, three or four months ago. ”Citing interest rate hikes by many central banks, Schwenk said this raises many questions regarding the short to medium term economic situation and how it could impact business.
”I think that in this sense there is a lot of uncertainty in the world situation… Of course, the war between Ukraine and Russia has also increased this uncertainty. Stock markets have reacted… There is a lot of uncertainty and it’s worse than three, four or five months ago,” he said.
In India too, there is a similar trend in the stock market and the RBI has raised interest rates, he added.
“So the global situation on some level, (is) trickling down to India, but I can’t see it at the moment in our actual operations. However, that creates some question marks now for the next six to 12 months,” he said.
So far, he said, Mercedes-Benz India has not seen this trickle down to consumer behavior, at least not in the luxury segment.
On the demand side, he said the company continued to see its order book grow, including in June compared to the previous month, and had more than 5,000 open orders.
”The consumer climate has not yet passed the question mark at this stage. So we are seeing a very strong demand for our products,” he added.
Asked if there was any concern that global uncertainties and external factors could impact consumer sentiment here in India as well, he replied, “We have to watch what is happening… We’ve got inflation stuff, we’ve got pricing stuff, so we’ve been forced to raise prices a number of times, mostly because the cost of inputs was rising, so we had to, to some extent, pass that on Prices have suffered in that sense.” He added: ”Hopefully we have enough growth momentum to compensate for this, because there is demand, and there is strong positivity in the pricing community. business itself, that is to say to a large extent, based on a few successful months and quarters.”
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