With surging consumer demand for vehicles, auto component makers are finding it extremely difficult to supply components to vehicle manufacturers, thereby crippling the latter’s delivery schedule 

While the last few months have witnessed a rise in the profit margins of major auto makers in the country, with most of them reporting an increase in sales, dearth in supply of auto components has severely hampered the delivery schedule of these vehicle manufacturers. According to a survey conducted by Machinist360, 67% of the respondents are of the opinion that auto component vendors are unable to keep pace with the growing demand for vehicles, whereas 33% of the respondents feel the other way round.

Demand for vehicles going beyond expectation

In this context, Manjunath S Samprathi, managing director of Sun Castings, a mid-sized auto component manufacturer in Bengaluru, says, “The prime reason behind the shortfall is the increasing consumer demand for vehicles, which is beyond the expectation of the auto manufacturers. Lowering of interest rates on loans, coupled with stimulus packages provided by the government have been helping consumers to buy new vehicles. However, auto component vendors had very little time to expand their capacity, considering the losses they suffered during the global economic recession.”

An official of auto giant Mahindra and Mahindra, on condition of anonymity, said that the company had to cut down production of its vehicles by 5% in December 2009 as its suppliers failed to meet the demand. Similarly, shortage of auto parts has impacted the production capacity of Maruti Suzuki too. “Lack of regular payments by vehicle manufacturers also adversely affected the production capacity of auto component makers. This resulted in closing down of several auto ancillary units across the nation,” says Rajeev Kumar, managing director of Reliable Auto Expo, a small-sized auto ancillary manufacturer in New Delhi.

However, with sales of vehicles expected to rise further in the coming months, major auto component vendors such as Motherson Sumi System, Advik Hi-Tech Private Limited Precision Camshaft and Bharat Forge, among others have already taken steps to step-up their production capacity.