No festive cheer: Auto retail staring at huge losses amid chip crisis, says FADA

Automobile retailers risk making losses in the festive season this year as manufacturers struggle with vehicle dispatches to dealerships due to the ongoing shortage of semiconductor chips. Various automakers are facing continued production challenges that is forcing them to curtail supplies to dealer partners.

While the 42-day long peak festive season commenced in the country with the first navratra last week, dealers are finding it difficult to convince customers to wait indefinitely for the vehicles of their choice. Though there is a robust demand for several models, dealers are facing booking cancellations. “Festive season is the most important period in terms of demands for us. On an average, the two month period accounts for 40 per cent of our total sales during a year," FADA President Vinkesh Gulati told PTI.

There is also a dip in on the spot buying due low inventory at the dealers as manufacturers are struggling with vehicle dispatches. This means that despite a rise in demand, auto retailers face risk of losses during the peak festive season. "While 50-60 per cent buyers go for prior booking, 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," Gulati said.

He added that this is the time of the year when auto dealers 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," he said. In the passenger vehicle segment, the waiting period for most models has gone up drastically from the earlier period of one to three months.

Gulati added that the situation overall is very challenging and it would be decent even if the industry manages to pull off a normal kind of sales volume during the ongoing festive period.

(with inputs from PTI)