No bargains for cars this Diwali

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Few discounts because the shortage of semiconductors and chips affected production. Manufacturers and dealers are unable to offer attractive discounts this Diwali.

A customer looks at a car at a Maruti Suzuki dealership (Image for representation only)

Consumers who generally wait for Diwali to buy new vehicles with great discounts and other freebies may be disappointed this year. With the semiconductor shortage, almost all of the major passenger car manufacturers have resorted to production cuts, resulting in a long wait for popular models. As a result, manufacturers and retailers are unable to offer attractive discounts this Diwali.

Sales around Diwali, commonly referred to as festival season sales, are important to automakers because around 30% of their annual sales occur around this time. However, supply side constraints are going to be the spoilers now.

Auto dealers said last month that retail sales during festival season would be lackluster due to the chip shortage, which has slowed the supply of popular models. They had said the inventory of requested variants, such as Baleno, Ertiga, Brezza, Creta, etc., continued to decline. In fact, the inventory is the lowest this time around compared to other years. Normally, resellers stock huge stocks over a month old as the festival months approach.

“With manufacturers drastically cutting back on production due to unavailability of semiconductors and ABS chips, shortage of containers, and high metal prices, customers may for the first time not get the vehicle they want. and lucrative programs this holiday season, ”the dealers said. noted.

Manufacturers and dealers have said the small discounts offered will be offered on some entry-level models, where the offers aren’t very attractive anyway because the prices are relatively low. Basic entry-level models don’t have a lot of electronic components, so the chip shortage hasn’t affected their production in a major way.

Wholesale shipments (from factory to dealers) of passenger vehicles by Maruti Suzuki India, Hyundai Motor and Mahindra and Mahindra (M&M) were hit hard in September due to the continuing shortage of semiconductors. August also saw similar shortages and indications are that the moderate sales trend will continue, at least until December.

During the month of September, Maruti recorded a sharp 56% year-over-year decline in passenger vehicle sales in the domestic market to 66,415 units. The second-largest passenger car maker, Hyundai Motor India, which was able to post weak single-digit growth through August, also slipped into negative in September. Its domestic sales were down 34% year-on-year to 33,087 units.

Although the full sales picture for September will emerge in the second week of the month when the Society of Indian Automobile Manufacturers releases full numbers, early estimates suggest passenger vehicle sales could fall by around 43%. from one year to the next.

The use of semiconductors in the automotive industry has increased globally in recent times, with advancements in technology and new models with more electronic features such as Bluetooth connectivity and driver assistance systems, navigation and electric hybrids in addition to the engine control unit. However, the automotive industry accounts for around 10% of global semiconductor demand, with the rest coming from the electronics and gadget industry, such as cellphones and laptops, among others.

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