Book car now for festive season, says FADA as chip shortage continues to disrupt supplies

The Federation of auto dealers association or FADA has released data for the month of July. Total vehicle registrations are up 34 percent in July and a year on your basis. While all biker segments registered growth compared to July last year, the semiconductor shortage and the prospect of a third wave remain a worry for automobile dealers. Passenger vehicle sales have shown a steady recovery, growing 24 percent compared to July 2019.

To talk about FADA’s outlook for the month of August and the festive season CNBC-TV18 spoke with Manish Raj Singhania, Vice President.

All the markets have now opened and FADA foresees a positive month led by recovery getting better. "The July numbers definitely show there has been a definite positive trend in the industry and after a long time all segments are seeing positive growth. That's a very good thing for the auto industry," said Singhania.

Moreover, he said, with the festival season about to start, the industry is expecting to see healthy acceleration. "For India per se, festival months and festival times are a boon for auto automobile industry. With vehicle supplies getting better, we definitely see a very good August happening," he said.

FADA have been raising the red flag about the shortage of semiconductor and supply of vehicles, especially in passenger car segment.

"In the recent survey conducted by FADA, 60 percent of our dealers in PV segment has a waiting period of two months and 35 percent of the dealers say they have a waiting period of four months. In PV there is a continuous waiting period,” Singhania briefed about the waiting period.

The FADA vice president has one advice for customers. Early bookings are essential if one seeks delivery during the season. "If the customer wants a good supply on his or her choice of vehicle during festival times, they need to book it right now and then only they will get his or her choice of vehicle during festival times. It is going to be a bit tough if the OEMs are not able to get the adequate supply that is required by the industry," he said.

When asked which companies were impacted the most because of the semiconductor shortage, Singhania said that every OEM is struggling to supply the requisite number of models as per the demand requirement.

“We just recently saw an article about Maruti cutting down on production, Mahindra saying they about 90,000 bookings with them. So as you see most of the OEMs have been facing semiconductor shortage. A few like Tata and Kia have been you know managing somehow the shortage of semiconductor but definitely the vehicle shortage is there with those with these OEMs also," said Singhania.