Chip shortage Halts Dussehra Car Sales

carEven though the demand for car is upbeat this year, dealers have failed to cash in due to supply constraints triggered by global semi-conductor shortage.

Vehicle sales on Dussehra plunged by 7.7% in Gujarat this year as compared to last year’s muhurat purchases, according to the estimates by Federation of Automobile Dealers’ Association (FADA).

Some 6,800 cars and 19,500 two-wheelers were delivered from showrooms across the state, according to FADA data. This was much lower than the 21,000 car deliveries and 7,500 two-wheeler deliveries on Dussehra last year.

“That demand for cars is upbeat this year is clear from the booking numbers remaining high. However, dealers are facing a serious inventory crisis, as automakers have cut production. Consequently, dealers are unable to meet demand from customers and see sales revive,” said Pranav Shah, the Gujarat region chairman of FADA.

Car dealers have barely ten days worth of inventory and even then in-demand models are not available. “I booked my car and the delivery was expected on Dussehra, but due to some constraints, I will be taking delivery on Dhanteras now,” said a city-based professional who asked not to be named.

Companies are offering attractive good discounts and dealers are also offering incentives to draw buyers.

“Demand is good but the supply shortage is eroding our festive season business. A major bottleneck is that customers cannot get models of their choice and are compelled to settle for other models,” said Jigar Vyas, the CEO of a dealership in Ahmedabad.

“For certain models, wait times have increased to as high as eight months and we’ve stopped accepting orders. We’ve told prospective customers to leave their contact details and we will get back to them whenever the cars are available,” Vyas added.

Many dealers said that they’re expecting deliveries from manufacturers in the second half of October and expect sales to be good in the Dhanteras-Diwali period.

Industry players say the majority of buyers are opting for financing and are reducing down payments. Non-banking finance companies are also offering attractive interest rates, dealers say.

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