The festival season in India is approaching and the auto industry is seeing a significant increase in demand at this time of year. However, while the demand for passenger vehicles may grow, supply chain issues are important and can be a boon for the passenger vehicle industry.

How are the supply chains affected? 

According to the Federation of Automobile Dealers Association of  India (FADA), supply chain problems could worsen as demand rises during the festival season. While the industry somehow escalated demand in August with most PV dealers having an initial stock of 30-35 days, Vinkesh Gulati, president of FADA raised his concerns going into the festive season.

On average, there is a waiting period of two to eight months between the manufacturers of the most popular models, but diesel vehicles have been hit hardest. “So producers with large volumes of diesel are hit hardest, but slowly and steadily, almost all producers are in this band,” Gulati said.

“The deficit is at least 30-40%, and every two weeks there is a struggle to maintain production and keep the assembly lines operational,” Gupta said. “In the passenger car segment, everything is moving, with the exception of some models that are not in demand. If the semiconductor shortage continues, affecting production in August, we will not be able to keep up with the improvement in customer requirements or demand, ”concluded Gulati on an alarming note.

Car manufacturers reaction to the supply chain crisis 

Tarun Garg, Marketing, Sales and Service Manager for Hyundai Motor India, admitted that the company is part of a global supply chain and is currently facing challenges, but ” is making every effort to focus on suppliers to mitigate the situation “

“ This is the main problem at the moment,” said Ashish Gupta, brand manager for Volkswagen India. “ The production capacity is planned at least three months in advance, but at present, we do not have a plan to stabilize, even for a week “

Car manufacturers are also facing trouble due to rising raw material prices, which also drives up the cost of buying cars. Along with the semiconductor crisis, where automakers are forced to buy chips from alternative suppliers at inflated prices to meet demand and sustain production, customers have to bear the burden.