On 9th September 2021, we witnessed that there were a lot of customers outside an automobile showroom in Viman Nagar who were disappointed at the fact that neither the dealer nor the manufacturer were offering much by the way of sops or discounts which is usually a common trend during festive occasions.

A resident of Chandannagar who wanted to purchase a scooter for his wife returned without the vehicle due to the long waiting period on the model of his choice. He also added, “I was expecting that there would be incentives for the customers such as discounts. But there is nothing of that sort this time round.”

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As reported by Shailesh Bhandari of BU Bhandari Auto, he said, “There is good demand from the customers’ end, and we have reached pre-Covid revenues. But there are issues on the supply side. The primary reason is that the cost of production has gone up, be it of material, or freight charges, or international shipping.”

Talking about the disruptions caused in the automobile industry, Amar Sheth, State Chairman of the Federation of Automobile Dealers Associations, said, “The effects of the shortage is more on the four-wheeler market than on two-wheelers. There is a good number of back orders to be serviced. The dealers are not holding a lot of inventory. They are not getting much from the manufacturers.”

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Talking about manufacturers like Piaggio and Mercedes-Benz, they announced some festive season offers and according to a spokesperson at Tata Motors, “As markets are opening, the recovery following the second wave has been good. We are introducing exciting products this festive season. But the challenge of shortage of semiconductors, compounded due to Malaysian Covid wave, may act as a dampener.”

What initially looked like a blip in chip production now looks like a long-term supply crunch. The chip shortage has hit the production of almost everything from home appliances to PCs and automobiles. Although market forces will eventually solve this crisis, the shortage is expected to last for a few years now!

Recommended Read: 8 Lessons to Learn From the Chip Shortage Crisis

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