Auto retailers stare at losses this festive season

New Delhi: Automobile retailers are staring at huge losses this festive season as manufacturers struggle with vehicle dispatches to dealerships amid the ongoing semiconductor shortage crisis, according to a top FADA official.

With chip shortage continuing unabated, auto manufacturers are faced with production issues forcing them to curtail supplies to dealer partners. With the 42-day long peak season having commenced with the first Navratri, dealers are finding it difficult to convince the customers to wait indefinitely for the vehicles of their choice. Amid robust demand for several models, dealers are witnessing booking cancellations and there is also a drop in on the spot buying due to dearth of inventory at their end.

"Festive season is the most important period in terms of sales for us. On an average, the two month period accounts for 40 per cent of our total sales during a year. This is the time when we actually earn and save for operations for the rest of the year. This year we are not getting adequate vehicles and are staring at losses," said FADA president Vinkesh Gulati.

He noted that in the passenger vehicle segment, the waiting period on most of the models has gone up drastically from the earlier period of 1-3 months. Gulati said with lack of inventory at the dealerships, spot purchases are hampered as well. "As per our data, while 50-60 per cent buyers go for prior booking etc, the rest 40 per cent are those who just come to the dealership and just buy a model. So this chapter is just closed for us as there are no extra units," he stated.

Terming the overall situation as very challenging, Gulati said that the industry would indeed be lucky if it is able to do normal kind of sales during the ongoing 42-day festive period, starting from first navratri to Diwali. "We are staring at big losses. During the festive period our retail sales used to be in the range of 4-4.5 lakh units in the 42-day period but this time around it is going to be just around the 3-3.5 lakh sales mark. We would be lucky if we are able to achieve even such a sales number," he noted.