With supply and demand cycles strained, the waiting game doesn’t sit well with one
Current data points to demand for vehicles in the country being strong. But there are outliers that need to be assessed to understand growth in wholesale. For starters, passenger car sales were already on a decline, way before Covid-19 pandemic related lockdown was announced in March 2020.
Following the announcement, sales and production activity was brought to an immediate halt, and sales fell to nought across the industry in April 2020. Following this, phased ops were permitted in may, and from then on, it took months for companies to regain any semblance of normalcy.
A big part of the problem was to manage and optimise logistics and supplies. Another pattern that has emerged is straightforward announcements of booking numbers for a number of recent cars and SUVS. And while most manufacturers are committed to increasing production for smelt delivery, it’s no secret that the waiting period for some cars is close 10 months.
5 lakh customers waiting
A media report says there are about 5 lakh customers awaiting vehicle delivery, and this wait extends to several months. Maruti has the highest waitlist – about 2.15 lakh car buyers are awaiting delivery of a Maruti car. Hyundai has about 1 lakh waiting while Kia has about 75k awaiting delivery. Tata, Mahindra and Nissan too have about 30k-50k buyers awaiting delivery.
In short, it’s no surprise that sales in current months seems positive. For starters, base sales was low. And the pandemic forces one to consider personal car purchases in light of health and safety. To add to it, the inactive start to the fiscal meant buying decisions were deferred to recent months.
While some factors have only one outcome, and that is sales demand, more staid patterns and functionality mean not all of that demand can be met right-away. This is being attributed to shortage of steel and semiconductors. The problem is further aggravated by the unavailability of containers to import of components.
Bookings and cancellations
A two-four month waiting period is nothing out of the ordinary. But, now waiting for at least 6 months seems a norm. Despite continual improvement, gnawing away at wait times is currently a difficult ask. This can be assessed by inventory levels at dealer stockyards.
There’s no virtue in waiting out the entirety of a waiting period. So while bookings are indicative of all things great, not all of them can be converted to a sale. Quite simply, a buyer is under no obligation to wait for a delivery for months at an end, and is likely to change their buying preference.
As business optimisation depends on the cycle of demand and supply, extended waiting period, and unavailability of components is rocking this ship even more unsteadily. Dealers have been surviving with less than 1 month of stock since the last 6 months. Long waiting periods has resulted in cross-shopping as many are booking multiple vehicles and buying the one which gets delivered first. On average, there are 25% cancellation of bookings.
