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Customers left waiting

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Utkarsh Parasrampuria, a Mumbai jewellery designer, has waited about three months to receive his new Volkswagen AG Polo. He's still not sure when it will arrive.

"This just goes on and on," said Parasrampuria, 25, who put down a deposit for his Rs 580,000- ($12,400) Polo in May. "I'm seriously considering getting a different car now."

 

Suzuki Motor Corp and Hyundai Motor Co, the two biggest carmakers in India, have also introduced waiting lists on some models, as a dearth of batteries, engine castings and other parts forces automakers to curb production in Asia's third-largest automotive market. Tata Motors Ltd is importing tyres from China after local component suppliers failed to anticipate a surge of more than 30 per cent in Indian car sales this year.

"At least for the next three to four months, the problems won't get resolved," said Pawan Goenka, head of the Society of Indian Automotive Manufacturers (Siam) and president at Mahindra & Mahindra Ltd, the nation's largest sport-utility maker.

Mahindra made 12 per cent fewer vehicles than it wanted to in the quarter ended June because of the parts shortage, Goenka said. Maruti Suzuki India Ltd, the country's largest carmaker, has waiting lists of as much as a month for its Swift and Dzire models. Hero Honda Motors Ltd, the largest motorcycle maker, couldn't make as many as 80,000 motorbikes in the second quarter, said Anil Dua, the company's marketing head.   Consumption boom
The shortage of parts and a consumption boom stoked by a doubling of per-capita income over the past eight years mean that Indian car buyers face industry-wide waiting lists for the first time in more than a decade. Makers of steering wheels, bumpers and headlamps are rushing to boost production and build plants to meet the surge in demand.

"The partsmakers were caught by surprise," said Deepesh Rathore, India managing director at IHS Automotive. "The loss of sales will lead to a loss of profit for automakers."

Tata Motors advanced 4.1 per cent to Rs 1,048.3 at the close of trading in Mumbai. Maruti rose 0.1 per cent to Rs 1,254.35 and Hero Honda gained 0.2 per cent to Rs 1,909.

Maruti has asked suppliers to boost investments after facing shortages of bumpers, tyres and batteries, Chief Executive Officer Shinzo Nakanishi said. Tata began buying Chinese tires as Indian suppliers couldn't meet its needs, said Debasis Ray, a spokesman for the Mumbai-based maker of trucks and $2,500 Nano cars.

'Unique problem'
"The supply of tyres has been occasionally disrupted," said Kurt Rippholz, a spokesman for Volkswagen in New Delhi. "That's affecting all carmakers, not only VW."

The carmaker has re-shaped production to better cope with supply interruptions, he said. Hyundai's India operations have also suffered from the industy-wide tyre shortage, said HW Park, managing director of its local unit.   "In India, there is a unique problem of undercapacity," said Ashvin Chotai, London-based managing director of Intelligence Automotive Asia Ltd. "The entire supply industry has been overcautious."

The lack of capacity is likely to persist for some time as machines for making components have to be custom-made and then installed in plants, said Sanjeev Varma, a senior adviser at Duff & Phelps LLC in Novi, Michigan, and an ex-DaimlerChrysler AG executive.

$30 billion
Bharat Forge Ltd, whose clients include Bayerische Motoren Werke AG and Ford Motor Co, is boosting capacity for making crankshafts by 10 per cent this year, said Executive Director Amit Kalyani. The company, which also makes forgings and transmission parts, is running at full capacity now.

Jay Bharat Maruti Ltd, a supplier to Suzuki's India unit and Mahindra, is adding shifts to make more fuel tanks and exhausts, said Executive Director Nishant Arya.

"We didn't expand last year because of a lack in demand," he said. "Only this year was demand at a high."

Nation-wide, partsmakers plan to spend as much as $2.5 billion in 2010 and may invest $30 billion by 2020 to boost production, said Jayant Davar, president of the Automotive Components Manufacturers Association of India. Concerns about how much automakers will pay for parts amid rising wages and higher steel costs have deterred investment, he said. "If we are assured that the pricing will be fair, then the increase in capacity may happen faster," he said.