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M and M sees chip crunch easing in 2022, eyes options for EV biz

Mahindra and Mahindra Ltd expects semiconductor shortage to persist in 2022 but with lesser severity as compared to the previous year, and is open to raise funding for its electric vehicle (EV) business, the Indian carmaker said on Tuesday.

M and M sees chip crunch easing in 2022, eyes options for EV biz
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The automaker also said with better availability of semiconductors, it hopes to maintain volume growth momentum from the third quarter onwards. While the industry has seen a strong recovery in demand for passenger vehicles in the past two quarters, with chip shortages hurting carmakers globally, companies have scrambled to make up for the production hit.

“Q2 was the worst of the chip shortage that we have seen... the shortage cut across the company’s entire portfolio,” said Rajesh Jejurikar, ED, Mahindra. Chaired by billionaire Anand Mahindra, the company faced a production loss of 32,000 vehicles in the second quarter due to the shortage, yet managed to record 9% growth in sales.

Jejurikar said the company was continuously adjusting production plans as per availability of chips, and expects the crunch in 2022 will not be as acute as 2021. In a post earnings call, Jejurikar said by 2027, Mahindra plans to launch 13 new sport-utility vehicles and expects electric vehicles to comprise about 20% of its volumes in India.

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