FADA president says supply-demand mismatch likely in festive season

Semiconductor-shortage-driven waiting periods expected to be roadblocks despite improving consumer demand in India.

By Mayank Dhingra calendar 01 Sep 2021 Views icon4331 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

September has dawned and with it the oncoming of the festive season in India, when consumers often buy a new vehicle on two, four or more wheels. While demand for passenger vehicles is on the rise, supply chain issues loom large and could prove to be a spoilsport for the PV industry.

According to the Federation of Automobile Dealers Associations of India (FADA), the supply chain is becoming a huge problem with every passing day, and it is expected to worsen with demand soaring during the festive season.

“We are at the cusp of the festive season which is likely to give a boost. However, the supply chain is becoming a big problem in the passenger vehicle (PV) segment,” said Vinkesh Gulati, president, FADA, in an interview with Autocar Professional.

While the industry somehow managed to circumvent demand in August with most PV dealers having an opening stock of 30-35 days, “we see concerns going into the festive season,” Gulati cautioned.

On an average, there is a waiting period between two and eight months across manufacturers for most popular models but it is diesel cars which have been the most impacted. “So, manufacturers whose diesel presence is high are being affected more, but slowly and steadily, almost all manufacturers are in that lane,” Gulati said.

With the Ganesh festival in September, followed by Dussehra and Durga Puja in October, the demand for new cars is only set to increase with some stability in consumer sentiment despite the rising fuel prices.

Hyundai Motor India’s director of Marketing, Sales and Service, Tarun Garg, has acknowledged that the company is part of the global supply chain and is facing the heat at the moment, but “is putting collective efforts with its vendors to mitigate the situation”.

Speaking to Autocar India, Ashish Gupta, brand director, Volkswagen India, said, “It’s the main challenge right now. Production facilities work on at least a three-month advance planning schedule but currently we do not even have planning stability even for a week.”

“The situation is the same across manufacturers. There’s at least 30-40 percent shortage and it’s a fight every fortnight to sustain production and keep the assembly lines running,” Gupta added.

According to FADA’s Gulati, “Everything is moving in the passenger vehicle segment, barring some models which are not in demand. If the way the semiconductor shortage has hit production in August continues, we will not be able to catch up with the improvement in enquiries or customer demand,” Gulati signed off on a worrying note.

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