Semiconductor shortage: Automobile dealer's body fears vehicle order cancellation may go up ahead of festive season

The Federation of Automobile Dealers Associations of India (FADA) on Tuesday said they fear that the cancellation of vehicles could go up to 30 per cent during the festive season due to shortage of semiconductors in India.

Speaking to ANI, Vinkesh Gulati, president of FADA, said, "Normally, we see the cancellation of vehicles around 10 per cent during the normal period when there is no push or external factors involved, but owing to the shortage of semiconductors in the market, the cancellation may go up to 30 per cent. Currently, the rate of cancellation is hovering around 15 to 20 per cent, but it may double as the festive season comes nearer."

During the festive season, customers book their vehicles and take delivery on auspicious day. However, if the waiting time increases ahead of the festive season, then the rate of cancellation may go up to 30 per cent, the FADA president told ANI.

Currently, the waiting period for delivery of vehicles is between five months and a year. Mahindra Thar has a waiting time of one year, while Kia Sonnet and Seltos have five months waiting period.

Industry sources said that the chip supply crunch has disrupted the production schedule of many companies such as Maruti Suzuki, Mahindra & Mahindra and Tata Motors, and companies are forced to go slow on the shop floor despite healthy demand.

Gulati said that during the festive season the sale of vehicles is 1.5 times more than the average month. But the shortage of semiconductors has dampened our prospects. "If the production is not corrected by the manufacturers, we will not be able to catch up the benefit of the festive season this time," he said.

Talking about the two-wheeler segment, Mr Gulati said there is growth compared to last year, but there are challenges in this segment also. "People are still continuing to work from home, while many other customers are grappling with financial constraints as they have lost their jobs or faced salary cuts. As the economy is opening up, we are expecting a push in the demand in the two-wheeler segment, and maybe that can support the two-wheeler figures going to pre-normal levels," he said.

( With inputs from ANI )