Huge demand, no supply: Global chip crisis hits India’s car market

New Delhi: The global shortage of semiconductor chips used in the manufacturing of new cars has led to a long queue of customers across all car retails in Delhi-NCR, with the waiting period for a new car ranging from three months to as long as six months, based on the variant and the car model.
The Sunday Guardian spoke to several car dealers across Delhi-NCR and all of them said that to get a new car, one has to wait for at least three to six months, depending on the variant that the customer is opting to buy.
For example, a Hyundai dealer from West Delhi said that the normal waiting period for a Creta is five to six months, while for Hyundai Santro, it is about three months. He further said that he is not being able to meet the demand and that many of his customers are unwilling to wait for that long.
Speaking to The Sunday Guardian, the Hyundai dealer said, “There is a shortage of cars from the backend. We are not getting the number of cars that we used to get earlier. Now we are getting cars only on booking. You know about the shortage of the semiconductor chip sets, this is what is causing the problem.”
Speaking to The Sunday Guardian, a KIA motor dealer from South Delhi expressed his helplessness about the situation. “We are helpless. It does not make us happy to turn down our customers. But for the Seltos and the Sonnet variants of the KIA cars, there is a long waiting period. The demand is very high, but the delivery is very slow. There are no new cars in the market; all of us are affected by the chip shortage. We are explaining to the customers about the shortage, some understand, others don’t,” he said.
The situation is similar with all car manufacturers in India. The Sunday Guardian spoke to the dealers of Mahindra, Tata Motors, and Maruti Suzuki and all of them apprised this newspaper of the car shortage and the long waiting period to buy a car. The Federation of Automobile Dealers Associations has also expressed its concerns over the growing shortage of cars. The Association has also pointed out how the festive season which just ended was unable to give a boost to the automobile market due to this chip shortage.
According to the Federation of Automobile Dealers Associations, the passenger vehicle segment and the two-wheeler segment witnessed a slide of 18% and 26% respectively during the 42-day-period of the festive season starting from mid-September and continuing till the end of October.
“We have witnessed the worst festive season in the last one decade. Semiconductor shortage which was already a full-blown crisis showed its true colours when despite a healthy demand, we could not cater to the customers’ needs as SUV, compact SUV and luxury categories witnessed huge shortage of vehicles,” said Vinkesh Gulati, President of the Federation of Automobile Dealers Associations.
The Federation of Automobile Dealers Associations in its report released in November this year said that the year-on-year demand for the passenger vehicle segment has seen a decline of 11.38%. Passenger vehicle wholesales in India saw a 27% year-on-year decline in October on account of semiconductor shortage and a steep hike in raw material cost, according to the auto industry body, Society of Indian Automobile Manufacturers (SIAM).
The passenger vehicle sales stood at 226,353 units in October 2021, compared with 310,294 units in the same period last year, the SIAM report said. A Tata Motors spokesperson also told The Sunday Guardian that the delivery of new vehicles is causing some delay. The Tata Motors spokesperson said, “We are challenged on the supply side with the shortage of semiconductors which might act as a dampener and we expect more clarity to emerge over the next couple of quarters. However, we are managing the situation as we have intensified coordination with our multi-tier supply chain to minimize the impact on production of vehicles and their delivery to customers. We are following a multi-pronged approach that includes procuring chipsets from the open market, managing our model/trim mix, leveraging alternate design with the use of standard chipsets, use of alternative chips, etc. to best mitigate the supply side risks.”
The Sunday Guardian also reached out to all the other major passenger vehicle manufacturers in India, including Hyundai, Toyota, KIA motors, Maruti Suzuki, asking about when this issue is likely to be resolved, but did not get any response till the time of going to press. However, some industry insiders that this correspondent spoke to said that the semiconductor shortage issue was not likely to be resolved in the next six months as the manufacturers have already created a massive backlog in their order books and those vehicles will itself take a minimum of six months to be delivered to the customers.