Industry body FADA (Federation of Automobile Dealers Associations) called the outgoing Diwali festive season the worst in the last decade and it also expects demand to be subdued during the next festive season around Christmas when vehicle sales traditionally see a spike.
"If I talk specifically about the car industry, the next spike should be in December because of the model changes but seeing the current stock level and production level, it's difficult to assess the situation. Next festive season during Christmas/New Year is also expected to be subdued," said Vinkesh Gulati, president, FADA, an industry body, which represents over 15,000 auto dealers that own over 26,500 outlets across the country.
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He said that chip shortage has affected supplies in the passenger vehicle segment creating a huge shortage of vehicles in the SUV, compact SUV and luxury segment.
"There are long waiting times and no push for customers to come and buy vehicles. The incentive for fresh customers is missing. Overall, I feel till the time the production problem solves, till that time I don't see any spike happening. The spike will happen first in the production side and then on the retail side," Gulati added.
"We were expecting that the festive season wouldn't be good but such a bad situation, we never expected," he said.
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Gulati further stated that as Malaysia's chip issue is slowly being solved, month-on-month production will improve. "But still the gap is huge. But even if that eases, full capacity production will come back only by February or March. This calendar year-end sale is not looking good for me. But maybe by March, we can see some good sales happening," he noted. According to FADA, it will take around a year to reach pre-COVID levels.
He said that generally, around 30% of retails happen by fresh walk-ins. "This time due to the unavailability of vehicles, the fresh walk-ins couldn't come. That's a big loss to the industry. These purchases are instant. The trigger is not the need of the car in these cases, it's the festive season," Gulati said.
Dealerships, he said, are currently dealing with a lot of customer concerns. "Lot of customer complaints are going to the manufacturers because we're not able to deliver. It's a problematic time for us. We're dealing with customer dissatisfaction. Whatever we commit, we're not able to deliver on that," Gulati noted.
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