Bajaj, KTM already feeling the pinch.
In April, 2021, news about the global semiconductor shortage is everywhere. That’s mostly because those chips are in many things we use every single day. The rise of working and learning from home during the pandemic is an easy way to explain it, but the big picture is a bit more complicated than that. From your smartphone and television to modern cars and motorcycles, semiconductors are absolutely indispensable—and we haven’t even mentioned computers and video game consoles.
So, what’s to blame? There are a lot of factors in play here. Starting in 2020, the COVID-19 pandemic threw a wrench into global supply and demand. For example, as people stopped driving as much, auto manufacturers canceled their semiconductor orders to suppliers. Once auto demand started to pick back up again, those same automakers were pushed to the back of the line, behind every other industry’s orders. Due to increased demand over the course of the pandemic, factories simply haven’t been able to keep up with it all.
Massive automakers like Ford, GM, Jaguar Land Rover, Daimler, and Mercedes-Benz have all been hit hard enough to slow and, in some cases, even halt vehicle production temporarily. France’s Renault and Peugeot have also reported similar situations, and there are undoubtedly more companies in the industry that are feeling this particular pinch.
The motorcycle industry is not immune, either. After all, at analysts’ best guesses the semiconductor shortage is currently predicted to continue into 2022 or 2023. More factories are in the process of being built to keep up with increased demand, but those buildouts take time. Companies and governments throughout the world are also reconsidering the entire way these supply chains are structured, and rethinking how to make it so this doesn’t happen again. However, no matter what solutions people come up with for the future, that doesn't change the shortage we’re all living through right now.
At the end of February, 2021, Bajaj reported that the semiconductor shortage was negatively impacting its ability to produce motorcycles in its premium segments: KTM, Husqvarna, and Dominar. Thanks to these obstacles, Bajaj managing director Rajiv Bajaj said the company’s premium segment growth was kept to just 50 or 60 percent above 2020, where he says it could have been 100 percent without these shortages. In other words, Bajaj says they could have sold twice as many bikes as they did, if they could have gotten their hands on those components. Not every moto manufacturer will be in the same position as Bajaj, but that’s still a lot of potential bikes to consider.