[dular]

I have been looking to buy a car since almost an year now and have observed a disturbing trend which in my opinion is totally against customer interest.

I have visited several dealerships in and around Delhi NCR in the last one year and enquired about the following cars:
1. Maruti Baleno
2. Maruti S-Cross
3. Hyundai Creta
4. Kia Seltos
5. Tata Harrier
6. Jeep Compass
7. MG Hector
8. Mahindra Thar
9. Mahindra XUV700

None of the above cars had a waiting time for delivery of less than 2 months. Some even had insane waiting time of more than 12 months. Disclaimer: Not for all variants.

Most of the people I know who have bought a car in the last 12 months have faced at least one or two price hikes after booking and before getting the delivery. The same holds true for cars released in the last 2-3 years.

So, the trend which I have observed is this:
Set price X for a car. Keep the waiting period of at least 2-3 months. Increase this price by Y every quarter. So, unless the buyer falls in that sweet spot where he is lucky to get the car before the price increase, he will end of paying at least X+Y most of the time. It can be even more for cars with higher waiting periods.

Consequences:
1. The dealerships with complete monopoly on the sale and possible manipulation by asking premiums for faster sale cycle.
2. Car manufacturers making higher revenue without really justifying the reason for regular increase in prices. (This was not existing earlier than 5 years)

Some people (including dealerships and car manufacturers) argue that the increase in cost of production material, inflation, shortage of chips are leading to such shortages and price increases. I beg to differ. Yes, chip shortages did exist but not any longer. Yes, prices of steel and aluminum increased in the recent past but they also went down. No car manufacturer decreased the price of their car because of that. Yes, inflation is there but that should be accounted in long run than cycles of quarters.

So, the question I want to ask members of this forum is this:
1. Do you think the shortages are fake or real?
2. If you think they are real, then does it not show poor management from car manufacturers?

[Moto_MP]

Buying any main stream car with a waiting period of above 3 months is just too impractical imho, because this booking neither give you a protection against price rise nor against new products being launched by other makers and even same maker at times. Although there are people who plan well ahead and 6 months waiting for them is no big deal.

Ideally bookings of around 2 months can be reduced to 10-15 days if you are ready to explore multiple dealers, are more flexible of color/variants, after booking the car from a dealer shouldn’t stop one from following up with the other dealers.

The sales guy doesn’t need to know how much you like a particular product, they will even tell you the waiting for ignis is 6 months if they know you only want this car. Waiting periods do come down when they know the car is just one of your options and there are strong chance of cross shopping. I have experienced a 6-month waiting car come down to be available in 7 days once but that might be a one off fortunate day or some decent bargain.

With present waiting periods to the tune of 6-12 month continuing for multiple cars and sales YOY still not showing the market to be that bullish indicates either the car makers have insight for an imminent recession so they don’t want to increase productions and suffer later, there is still chip/parts shortage or they are just enjoying having our capital for 6-8 months.

It is unlikely that the present situation will continue for longer, sooner or later things will surely be back to normal where 3-4 months bookings are only for some very few in strong demand cars/variants.

[comfortablynumb]

Some related threads:

https://www.team-bhp.com/forum/india...ou-handle.html (Delivery waiting period : How much can you handle?)

https://www.team-bhp.com/forum/india...-you-deal.html (Delivery Waiting Period - How do you deal with it !)

https://www.team-bhp.com/forum/india...g-periods.html (The curious case of priority car deliveries & long waiting periods)

https://www.team-bhp.com/forum/india...ng-period.html (Case against buying a car with a high waiting period)

[GTO]

Nothing fake about it. Remember, manufacturers are in the "selling cars" business, not "make customers" wait business. The OEMs can book a sale / revenue only when the car leaves their factory gate. There is unbelievable pressure to push cars out. Targets, bonuses & performance reviews depend on these sales. Share market prices depend on these sales. Customers will go to competitors if the waiting is too long. Dealers also cannot afford to hold inventory for long due to inventory-financing / floorplan costs, and no one wants to buy a car that's been in the yard for too long.

So yes, the shortage is genuine.

Only exception to this waiting game are brands like Ferrari who intentionally create a supply shortage to maintain brand prestige, avoid discounting etc. Luca di Montezemolo once famously said that he will always build 1 less Ferrari than there is demand for. You'll also see this with special edition supercars.

But in the mainstream segments, it's all about the transaction & money.

[dular]

Originally Posted by GTO

Nothing fake about it. Remember, manufacturers are in the "selling cars" business, not "make customers" wait business. The OEMs can book a sale / revenue only when the car leaves their factory gate. There is unbelievable pressure to push cars out. Targets, bonuses & performance reviews depend on these sales. Share market prices depend on these sales. Customers will go to competitors if the waiting is too long. Dealers also cannot afford to hold inventory for long due to inventory-financing / floorplan costs, and no one wants to buy a car that's been in the yard for too long.

So yes, the shortage is genuine.

Only exception to this waiting game are brands like Ferrari who intentionally create a supply shortage to maintain brand prestige, avoid discounting etc. Luca di Montezemolo once famously said that he will always build 1 less Ferrari than there is demand for. You'll also see this with special edition supercars.

But in the mainstream segments, it's all about the transaction & money.

Theoretically, all the points which you mentioned makes sense. And I for one, also believed the same.

However, few follow up questions then on the reasons for this situation (in case it is real):
1. From my personal professional experience in the equipment manufacturing industry, there are several forecast models which are followed to plan the production in advance. Bigger companies use a much more sophisticated forecast models and software to manage production exactly in line with the arguments made in the first paragraph. Regular feedback is taken from the sales people in the field. So, does this reflect poor planning and management from some OEMs ?
2. I agree that there was a time when semi conductor shortage was real. But from personal experience, I can tell that things have changed. The lead times have gone down drastically. I would even dare say that in some cases it has come back to the pre covid times. So, again, is this a case of mismanagement?
3. What is the role of dealerships in the current scenario ? To exploit customers by charging premiums and selling not-needed accessories (as stated in Threads shared by comfortablynumb) ? Is it the customer or the OEM who should take steps against such practices ?
4. And what about the OEMs who are increasing prices every 2-3 months? Are those justified? Such frequent price increases are unprecedented at least in India in the past.

[lionheart_mm]

This is global phenomenon. A few months back I went to a Mazda showroom in the UAE and the waiting period for their Mazda 6 car was 7-8 months. I checked the car with a famous used car seller and they quoted higher price for a 2 year old Mazda 6 than what the showroom has quoted me for a brand new one. At least in India I don't think this problem exist.

[spiritofmars]

It's a combination of the pandemic disruption and the Bullwhip effect. Forecasting is not as simple as you're making it sound, and supply chain fluctuations are an ongoing problem in operations management. This is not something solved by just software or excel sheets. It takes a lot of time and effort to sync supply & demand, a problem exponentially multiplied by the complexity of global supply chains and the product complexity of an average automobile.

[drjaygoyal]

I agree the waiting time may be due to shortage. But regular price hikes is unjustified. It is just companies are trying to use the situation to their advantage and make some money.

I just recently got a call from a BMW dealer who is selling a demo car from 2020, run for approx 5600 kms at just 10 lacs less than a new car.

Even before I could respond, the car was sold !!

It’s not just dealers or the company, It’s also that we as customers are willing to buy cars at unreasonable prices who are equally responsible for this problem.

[pqr]

Many successful products have backlogs, but everything else is available off the shelf, some with discounts. Recent supply side constraint is just an exception largely due to COVID-19, semiconductor shortage, China lock down et al, however, everything is transitory in nature. In coming days everything will get back to normal due to softening of demand for semiconductors in electronic industry.


For illustration: enquiries for the current generation of Hyundai Creta are often met with cold shoulders even after three years of production. Just inquire about a year-old Alcazar at the Hyundai dealership and they will chase you like a hound.

[Carma2017]

The semi conductor crisis is in no way over. The platform designs of electronics for cars are not revamp able overnight. It takes time to migrate to newer semi conductor-light designs. It would be at least till 2023 till things stabilize. Pre Covid levels are a distant dream.

With an impending China-Taiwan war being anticipated by many, there is a rush for booking of Semi conductors at least in Automobile industry. Also, with recession storm clouds also gathering in Europe, OEMs are trying to maximize sales today.

Not only semi conductors, there are other parts as well where there are short term crises occurring due to China Lockdowns or other local disturbances. Also, no OEM was ready for explosion in demand during Covid. And they are playing catch up still. Of course this too shall pass, but believe me every OEM is doing its best to make hay while the sun shines.

[paliontile]

I don't think the semiconductor supply chain issues have been completely resolved. At the foundry level it may have been resolved, however the foundries have figured out the value of semiconductors in automobile industry and the premium the manufacturers are willing to pay to make sure they can roll out more cars from the assembly line. So there is quite a bit of negotiation between the auto manufacturers and the foundries.

I also refuse to believe the auto manufacturers can't solve this problem without hiking the car prices. But it all boils down to their profit margin and long term goals. Some may de-prioritize the semiconductor chip procurement if they incurred huge expenses in RnD and marketing etc in a given quarter and expect the new product launch enthusiasm and customer interest to carry them along for a quarter or so without hurting their image. Mahindra will soon realize if not already, that the hype around a new launch will die down and people will start getting annoyed with these waiting times, especially when competitors start catching up on new launches (like Maruti). Again, all of this is speculation, but I don't think we can oversimplify the problem of waiting periods.

As for reduction of price when raw materials cost decrease: Just to bring an analogy, not to politicize, a non-profit minded GoI didn't budge on fuel prices when global crude dropped because they want to build the reserves. A for-profit corporation can't be expected to do any different when they are answerable to their share-holders. Current trend of price increases almost looks like a pricing cartel has been formed across the manufacturers making sure there are no alternatives available in the market at lower price point.

[Rocketscience]

This is a sort of duplicate thread to this one

https://www.team-bhp.com/forum/india...ml#post5377361 (New cars that are readily available, without any wait period)

And I'll Quote my post from there as well

Originally Posted by Rocketscience

I have said it before and will say it again, long waiting periods are a myth created by automakers to create the aura of high demand. Sure there are 2 or 3 exceptions including the Mahindra XUV 700 where the demand exceeds the supply, but others have the capacity to produce a lot of cars if the demand is there without much trouble and include all Marutis, Hyundais and Kias here.

Starting from Cruze 2012
Said 2 months Delivered in 2 weeks

Honda City 2014
During the second month of its launch
Said 3 months Delivered in 3 weeks

Creta 2017
Said new model's (2017 manufactured vs 2016 which was readily available) delivery will start from mid march or so but started calling after 20th Jan and gave me the car on 1st Feb, it was a superhit car then (like now) and dealers claimed atleast 4-5 months waiting time.

Brezza 2022
Many publications claim 50,000 cars backlog, 6 months waiting, all a joke.
I booked in July, wanted in September but to be sure I will positively get it then, booked earlier.

SA claims he has received the shipment twice in one month where I could have gotten the car but he didn't call me since I wanted September delivery, in other words if I wanted it immediately I could have gotten the car in less than a month.

Have changed the booking to AT now, expected in Aug last week or September, had a little public fallout with the SA, lets see when or if he calls now.

The only thing constant has been me playing cool with them and not pushing for early delivery or showing any excitement, I'am firm on colour and variant/model year choices and always tell them I will wait without issues.

Bottomline is only specific models like Mahindra XUV700, Scorpio N and Magnite/Kiger have genuinely long wait times and in the Mahindra's case the demand has exceeded their already high supply and they are no Hyundai or Maruti when it comes to ramping up production.
Nissan and Renault don't have that sort of capacity at all and are suffering from low supply as a result, it is a tragic situation for them, even Ford couldn't initially ramp up production for Ecosport when it became a blockbuster hit initially and it stuck to about 4K cars a month for domestic market for a very long time and the demand exceeded supply then, they could have sold a lot more but didn't have the capacity. They eventually increased it but that story didn't end well for various other reasons.

For all the other models mentioned, book the car with a big dealer and more often than not you will surely get the car in less than half of the waiting time quoted.
I have personally and in my circle experienced countless such examples, in Hyundai, Maruti and Kia, even Tata.
Rest the BHPians can share their first hand experiences so that we can get a clear picture of all states and cities in India. I'am from Delhi NCR and maybe car makers prioritise bigger cities first, but I doubt that as well.

[ajayc123]

I think, like the service industry has learnt from covid that work from home is possible, likewise, the automobile industry seems to have learnt that they can use waiting time as a lever to remove discounts and raise prices recklessly.

Buyers are feeling the pinch, but once the dust settles down, ie the sales starts stablizing / declining, I am hopeful about improvement in the situation by early next year.

[VPJ74]

I have been in the market for the past 1 month for an auto petrol hatchback and have faced similar frustrating and erratic experience regarding availability of cars to buy and even to TD. Meanwhile, dealers keep pushing you to book model's they want to sell and often even without a TD! Imagine booking an "auto" after TD'ing a manual :-). I have come to the following conclusions:

1. It's a Seller's market. Demand exceeds supply so they want to make the most of the current situation. No discounts, poor choices.
2. Availability, pricing, price hikes are all too erratic and not in my comfort zone.
3. I am not comfortable waiting 3-4 months for a car especially if uncertainty around availability (Jazz, Polo) or pricing (Mahindra) exists.
4. The Used car market is also over-priced with not enough good options.
5. It seems that the dealers are expecting a bumper holiday season and are stocking up for the same. All their focus and inventory is towards maximum booking/delivery for this period.


I do not need a car right now. I am not in the "Holiday season" buying camp and hence I have decided to defer my buying decision for a few months. All the odds are stacked against me as a buyer and I don't like that.

As to OP's post reg. deliberate manipulation of inventory, I don't think it is intentional as OEM's are dependent on their supply chain which has been disrupted globally but they could be trying to make the most of the situation. As customers, we can only respond with our wallets.

[roby.thomas]

I think now the number of people who can afford vehicles commanding above 15L price on road has significantly increased too. I'm still reluctant by the way. The downside I see with this is, even in that price bucket getting a vehicle for test drive is dismissed by some dealers. I would have expected a better treatment. My case in point was asking for Alcazar, at VTJ Hyundai, Kochi several months back. I may or may not have bought it, but getting a feel of the right trim was important. I think given it sells in the numbers of the maximum capacity, dealership do not care. Or the sales advisor didn't think I would buy it at all, which was kind of true. But what if after driving, my impressions changed and I really liked it ? This exactly happened with my current car when I bought it. However nowadays they didn't seem to bother, so long as it's got a waiting period (or so I was told). I think I also asked a question in this forum, if I will get a test drive vehicle for a longer run by paying for it.