The semiconductor shortage and sudden surge in demand after the economy opened up, along with the launch of new models – some of which have become blockbusters – have resulted in a long queue for deliveries so that buyers are scrambling to buy the vehicles. Unfortunately, for many, late delivery means they will have to pay more for their vehicle as the prices applicable at the time of delivery have to be paid. Input costs have risen for automakers and have increased on average by about 6% since the start of this year.
There are waiting periods of several months, or even a year for some, and the best models include the Mahindra XUV7OO SUV, Maruti’s CNG variants, and SUVs such as Hyundai’s Creta, Kia’s Seltos, the MG Astor, Tata Punch, Mercedes GLS and Audi. Electric eTron.
So how long is the customer waiting list for different brands? Maruti, the country’s largest automaker with some of the most popular models, has an order book of over 2.5 lakh of cars. The company’s chief executive and CEO Kenichi Ayukawa has often apologized to buyers for the delays, and senior officials said the situation was unprecedented.
“I have never seen this kind of situation in my long career,” said Maruti director (sales and marketing) Shashank Srivastava. “The waiting period is inter-model, for almost all manufacturers.”
Hyundai, the second-largest automaker, has an equally big problem to tackle with more than a lakh of undelivered vehicles. MD SS Kim says customers are always kept up to date on delivery positions to ensure transparency.
The global semiconductor shortage has emerged as a major obstacle to any possibility of a rapid ramp-up in production, and companies say it will take time for the situation to normalize. The current assessment is that the problem will persist until at least the first half of 2022.
It is also estimated that Tata Motors, which is capitalizing on the success of the new models, is more than a lakh behind with cars on hold. “The wait period for various models ranges from one to six months. Overall, our backlog bookings are over 3.5 times our monthly sales,” said Shailesh Chandra, president of the passenger vehicle business. by Tata Motors.
The chip shortage, in fact, is having a very negative impact on the nascent electric vehicle industry. Green vehicles contain many technologies and require many chips as part of their architecture. Chandra agrees, “For electricity, the waiting period is the longest, and we are rapidly increasing our supplies.”
Then there are other companies such as Mahindra & Mahindra which have seen superlative demand for new launches such as Thar and XUV7OO SUVs. Company Director (Automotive) Rajesh Jejurikar has often said that the order book has even far exceeded their internal expectations, with delivery times spanning several months.
According to dealer estimates, delivery times for some Thar variants are up to a year, and the XUV7OO has grown even faster with the initial 50,000 reservations made in just two days. “Cumulatively, 50K XUV700 are spoken which means a value of almost Rs 10,000 crore. The enthusiasm of the customers is astounding… we respect the responsibility it places on us,” said Mahindra Group President Anand Mahindra , in a tweet after the units were sold. just a three hour booking window.
Santosh Iyer, vice president of sales and marketing at Mercedes Benz, says companies need to go the extra mile to compensate buyers whose deliveries exceed promised deadlines due to parts shortages. “Customers who couldn’t get the promised delivery during Diwali were offered holiday vouchers. We communicate with them constantly, and also write letters to them to explain the situation to them. The idea is to assure them that we haven’t forgotten them after taking their money. “, says Iyer.
MG Motors’ new SUV, the Astor, also saw 5,000 units booked in just 20 minutes. The company has a cumulative reservation book of 46,000 units.
Companies have tried to increase production and source chips to reduce the customer queue. Many expect that with the holiday season behind us there may be some slowdown in the dealer rush, at least until the New Year.