FADA terms semiconductor shortage as a 'full-blown crisis'

New Delhi: Automobile dealers' body Federation of Automobile Dealers Associations (FADA) on Tuesday expressed concern that the chip shortage issue could derail passenger vehicle (PV) retail sales during the festive season, as automakers are struggling with an adequate supply of vehicles to dealers due to production challenges.

Terming semiconductor shortage as a 'full-blown crisis', the industry body warned of a lackluster festive season, especially for the passenger vehicle dealer fraternity, with low inventory levels and non-availability of the fast-moving model variants ahead of the peak festive period.

"Auto dealers are facing the most challenging phase of their business career as Covid-19 after-effect continues to play spoil-sport. Until last year, when demand was a challenge, supply is becoming a bigger problem currently due to shortage of semiconductors, even though there is high demand for passenger vehicles," FADA President Vinkesh Gulati said in a statement.

Every dealer by now starts planning for a bigger offtake in anticipation of a bumper festive season, but due to supply issues, inventory levels are at the lowest levels during this financial year, he added.

"With OEMs drastically cutting down productions due to unavailability of semiconductors and ABS chips, shortage of containers and high metal prices, customers for the first time may not get a vehicle of their choice and lucrative schemes during this festive season.

The ultra-frequent price increase is also keeping entry-level buyers at bay," Gulati noted. He added that customers especially at the bottom of the pyramid were trying to save instead of buying articles like two-wheelers.