For electronic companies, this represents a reversal from the April-July period, when they scaled back production due to falling demand.
Top car manufacturers such as:
Mahindra & Mahindra, Hyundai and are increasing production by more than 15-20% year-on-year, while parts supply is decreasing.
Electronic brands such as LG, Samsung, Xiaomi, Realme, Haier and Godrej have advanced production for the holiday season by about two to three weeks to build inventory with plans to further expand it in September, company executives and contract manufacturers said.
“Production buoyancy is back for all products, including smartphones and
as everyone expects a recovery in demand around the holidays,” said CEO of a major manufacturer of electronic contracts.
They will increase production by 30% year-on-year in August and are likely to expand by 50% next month, he said.
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Pradeep Jain, director of Jaina Group, which makes mobile phones for top smartphone companies, said brands finally scaled production in August after resorting to budget cuts in recent months. “The demand forecast has improved,” he said.
The auto industry expects record sales this festive season after two bad years – 2020 and 2021 – due to component shortages.
Gaurav Vangaal, associate director, light vehicle production forecasting at S&P Global Mobility, said he expects this festive season to be the best ever.
“Production output is finally moving in sync with demand. This festive season, both demand and output will be 15-20% better than in 2021,” said Vangaal. He said the festive sale will break the 2018 record by 5-10%.
Automakers are on a cumulative order book of 0.9-1 million with
Suzuki orders increased to 350,000 units with the launch of two new SUVs – Brezza and Grand.
While improved supply of components, including semiconductors, and increased production will reduce the backlog, it will not be completely eliminated.
“The question is… a longer waiting time for vehicles,” Amish Shah, director of Mahindra & Mahindra, recently told analysts.
There is also a continued increase in monthly volumes and production at the top five automakers – Maruti, Hyundai, Tata Motors, M&M and Kia.
Electronics and smartphone makers had cut production by 15-25% in April-July due to stockpiling. But inventory levels have subsequently fallen, with companies reporting a 10-15% year-over-year revenue growth during the recently concluded Independence Day sales.
The industry expects the premium segment to drive festive sales this year and is focused on scaling production of such products. In the past two years, there has been a shortage of premium products due to increased demand and component shortages.
LG India vice president Deepak Bansal said the festive production increase is in the premium range, while Haier India president Satish NS said the company has started pushing the premium range by reducing the production of entry-level products.
Emails sent to Samsung, Xiaomi and Realme went unanswered until press time.
The revival in demand for the mass segment will largely depend on agricultural production and inflation, but the premium category is growing faster and thus seeing higher production, said Kamal Nandi, business head at Godrej Appliances.