2021’s chip-impacted festive season worst for PVs in a decade, says FADA

The Indian automobile industry has had a rough year and going by the number of new vehicles sold on Dhanteras, the first day of the festive Diwali season in India, thing look rather grim.  As reported by Autocar Professional, cumulative sales of 12 PV OEMs in October 2021 were 258,774 units, down a substantial 21% year on year (October 2020: 325,965 units). 

Speaking to PTI, automobile dealer body Federation of Automobile Dealers Associations (FADA, which represents over 15,000 dealers and 26,500 retail outlets, said the ongoing festive season is the worst for business in a decade for its retail partners across India. This is mainly because of the massive supply demand-supply mismatch created by shortage of semiconductor chips in the popular SUV, compact SUV and luxury vehicle segments.  FADA president Vinkesh Gulati is quoted as saying, "This is the worst festive season which Indian auto retail has seen in the last decade. Chip shortage is impacting supplies in PVs, creating a huge shortage of vehicles in the SUV, compact SUVs and luxury segment.”

On Wednesday, Maruti Suzuki India said it had sold around 13,000 units on Dhanteras, lower than sales on the same day last year. "Demand and bookings have been good. We tried our best to deliver as many vehicles as possible. However, due to supply side constraints, we closed a little lower than last year, at around 13,000 units," Maruti Suzuki India’s senior executive director (Marketing & Sales) Shashank Srivastava told PTI.

Meanwhile, Tata Motors, which has been on a roll in the PV segment, saw its Dhanteras deliveries grew 94 percent.  "On the auspicious day of Dhanteras, our deliveries nearly doubled as compared to last year, owing to strong demand for our 'New Forever' range, including the newly launched Punch and the EVs. Across India, our deliveries grew by 94 percent," said Shailesh Chandra, Tata Motors President, Passenger Vehicles Business Unit. Chandra, however, did not reveal the specific number of PV sold on November 3.

MG Motor India delivered 500 units on Dhanteras. The carmaker,  which recently has entered the competitive midsize SUV segment with its tech-laden Astor, aims to sell around 3,000 units of the midsize SUV a month. The OEM says the deliveries is particularly special considering the acute shortage of semiconductor chips and aims to improve the availability to meet its initial target of 4,000-5,000 deliveries by end-2021. As is the case, with semiconductor shortages impacting production for OEMs, the Astor has been sold out for 2021 and bookings are now open for Astor delivery in 2022.

As is known, the used car market is seeing a massive boom. Leading multi-brand certified used car firm Mahindra First Choice Wheels said delivered a record 1,028 units on Dhanteras through its 1,100 dealerships across more than 300 cities in India. According to MFCWL’s MD and CEO Ashutosh Pandey, “This year's festive season has been remarkable as the brand has registered 40 percent growth. We are overwhelmed with the traction on our e-commerce platform which has contributed 25 per cent to our overall sales during this festive period.”

Pandey is very optimistic about growth in the coming months. “We are sure that this demand will continue to surge till the end of the financial year and we look forward to supporting the consumers to find their vehicles through our strong online and offline channels."

The big positive though is the Central government's slashing of excise duty on petrol by Rs 5 a litre and diesel by Rs 10 a litre on November 4. While some States including Some like Assam, Gujarat, Uttar Pradesh, Karnataka, Bihar, Tripura and Goa have cut their VAT on the two fossil fuels, others are expected to do so in the coming days. This should give a fillip to new car sales. But with the pent-up market demand over, will car buyers really throng showrooms only because of the fuel price cut? Is it a case of too little and too late to enthuse the PV buying consumer in India? Diwali and the festive season is on and we will get to know the real-world market story only later this month and beyond.