The global semiconductor shortage came as an unexpected challenge for automakers around the world. Because of a combination of problems converged such as insufficient capacities at manufacturing units, the pandemic, and the tense socio-economic environments, the undersupply of semiconductors has slowed down the production of new vehicles.
Each company is facing a huge list of pending orders. According to the recent Economic Survey 2022, carmakers are having 7 lakh pending orders as of December 2021 in India.
According to reports from the Society circumstance of Indian Automobile Manufacturers (SIAM), passenger vehicle sales were down by 13% in December 2021 on a year-on-year basis. The two-wheeler sales have plummeted to the lowest in the last 9 years because of fuel prices going up and owing to the decreasing purchase power in rural districts, the damage was done by rising inflation.
DentsuMB Managing Partner Indrajeet Mookherjee said that the Covid-induced semiconductor shortage disrupted car sales around the world and it resulted in increased waiting periods and lower production in India too. Mass car makers who make higher volumes had an average 10 per cent sales slump month-on-month while premium car makers who secured the supply side are still able to grow.
Grapes CEO Shradha Agarwal says that they have seen new launches taking a hit over the past 2 years and it will take some time to normalise.
Initiative CEO Vaishali Verma said that they work with a lot of auto brands and the last two years have been stressful. With rising demand, because of production-related problems, the supply is limited. And this combined with increasing inflation and accelerated crude oil and fuel prices. They have witnessed the category slashing down at least 60-70% of their marketing budgets.
The situation with semiconductors remains dubious. With the next 2 years projected to be slow, the marketing strategies have changed and evolved.
Mercedes-Benz India Vice President – Sales & Marketing Santosh Iyer quips that the global auto industry continues to face disruptions. However, they are witnessing a better-than-expected recovery. Despite supply-chain challenges, they expect 2022 to be one of their sales best years in India. For the first time, they have orders for over 5000 cars. C-Class registered more than 1000 bookings even before the price announcement. The waiting period ranges from two months for some models to two years for speciality cars like G-Class.
Regarding the impact on marketing plans, Iyer adds that the vehicle shortage has certainly had an impact on their marketing and they have shifted focus from advertising to CRM. They have invested their resources in curating very luxurious and exclusive experiences for their customers and prospects like sending them to Paddock clubs for F1 races, creating unique AMG emotion tours and many other experiences. They are looking to build relationships and strengthen their brand ethos of ultimate luxury. Marketing spending has also shifted from performance media campaigns to brand campaigns and customer experiences.
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