Sales of cars and sports utility vehicles (SUVs) jumped 16 percent in September to a little over 2.33 lakh, bucking the broader trend of a freefall in wholesale numbers during the month.
The retail demand for passenger vehicles—cars, SUVs and vans—was strong in September but there was a sharp drop in the vehicles that manufacturers sent to dealers.
This mismatch has sunk the inventory at dealerships to record lows of just 15-20 days against the normal 40-45 days during this time of the year, data shared by the Federation of Automobile Dealer Association (FADA) show.
“As we enter the core of this year’s festive season, the full-blown semiconductor crises continue to create hindrance in PV (passenger vehicle) sales as vehicle inventory at dealers end dip to record lows of 15-20 days during the current fiscal,” FADA president Vinkesh Gulati, President FADA said.
The industry entered the festival season on October 7 with Navratri, a nine-day period considered auspicious by Hindus. The festival season, which will culminate in Diwali in November, accounts for 30-40 percent of annual volumes. This is the time households reserve for big-ticket purchases such as cars, homes and jewellery.
Preliminary numbers announced by 10 car-making companies show that wholesale dispatches —vehicle makers to dealers—nosedived 37 percent in September as a shortage of semiconductor restricted production.
This data does not include numbers from Andhra Pradesh, Madhya Pradesh, Lakshadweep and Telangana.
India’s leading car maker Maruti Suzuki slashed output by 60 percent followed by others like Hyundai and Honda due to the worldwide shortage of chips that has hit other industries as well.
With high demand, a long waiting period continues to frustrate buyers, Gulati said.
The waiting period for certain high-demand models like Hyundai Creta, Kia Seltos, MG Hector and Maruti Suzuki Ertiga has gone up to five months.
“The chip shortage looks less likely to ease within next two quarters. As a result, passenger vehicle sales are likely to stagnate going ahead, even though OEMs are coming ahead with new launches to keep the customer excited,” FADA added.
Retail demand for two-wheelers remained subdued in September, with volumes falling 12 percent to 9.14 lakh. While the semiconductor shortage has hit two-wheeler production as well, demand has remained soft so there is adequate inventory at stockyards.
As per FADA, the average inventory for two-wheelers ranges between 30 and 35 days.
“With India entering the 42 days festive period beginning today (October 7), the near-term outlook for this year’s festive season is a mixed bag. While dealers have increased their inventory in two-wheelers, PV inventory is at the lowest during this financial year due to the ongoing semi-conductor crises,” FADA added.