Why car deliveries in India are at risk this Diwali
What's the story
India's auto industry is facing major delivery challenges, amid a spike in festive demand. The situation is particularly critical as vehicle manufacturers race against time to meet Dhanteras and Diwali deadlines. The primary reason behind these delays is the shortage of trucks, trailers, and rare earth magnets. These shortages are affecting dispatches for both four-wheelers and two-wheelers alike.
Market response
Car and 2-wheeler sales skyrocketed in September
Following the implementation of GST cuts on September 22, car and two-wheeler sales have witnessed a sharp increase. Factories dispatched an estimated 3.75-3.8 lakh vehicles in September, marking a 5-6% growth over last year. Retail sales have also skyrocketed, witnessing a nearly 25% jump as customers are lapping up tax benefits, festive offers, and Navratri timing.
Logistics strain
Truck industry under pressure to meet demand
The sudden surge in demand across various sectors has put immense pressure on the truck industry, with fleets working round-the-clock to deliver goods across India. An industry official said, "Add to this the usual gifting rush around Diwali and you have a problem that is increasingly becoming very challenging to solve." This highlights the logistical challenges faced by businesses during this festive season.
Industry response
Carmakers working overtime to resolve issues
In light of these challenges, carmakers are working overtime and even using railways to expedite dispatches. Maruti Suzuki's Partho Banerjee said they have pending deliveries of 2.5 lakh vehicles and are trying their best to ensure timely dispatches. Tata Motors Passenger Vehicles's Amit Kamat also acknowledged the demand spike after GST cuts and said they're working with logistics partners to expedite dispatches despite the challenges.
Market impact
Luxury carmakers also affected by delivery challenges
Luxury carmakers like BMW Group India are also facing delivery challenges due to high demand on Dhanteras and Diwali. Two-wheeler manufacturers are dealing with logistical problems as well as a shortage of rare earth magnets, an essential component for electric vehicles. A top official from a leading company said, "The cut in retail prices has meant that there has been a sudden rise in demand for scooters and motorcycles."