Car Discounts Slips To Three-Year Low This Festive Season As Semiconductor Issue Plays Spoilsport

Car buyers generally eye for festive season period as it's the most auspicious time of the year for any purchase. Even automakers try and cash in the demand by the way of attractive discounts across their model range. However, buyers may get a bit disappointed this year. According to a data compiled by JATO, the average discount level has shrunk more than 50 per cent since 2019 and out of 88 models sold in India, 28 models aren't attracting any discount this festive season.

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The deterioration in discounts has already shown an impact on festive season sales

Now to give you a perspective, on an average, discounts on SUVs have dropped from Rs. 47,000 to Rs. 15,000 while small car discounts are down from Rs. 43,600 to Rs. 13,000. And to further give you an understanding, last year (2020), 21 out of 102 models were not on discount and in 2019, 23 out of 106 models didn't attract any discount. The deterioration in discounts has already shown an impact on festive season sales as Navaratri sales haven't been too strong and reassuring and even Dhanteras and Diwali sales are likely to take a hit. That said, the drop in sales is not due low demand or negative customer sentiments. This time around, automakers have adopted the supply-pull approach by not reducing prices or giving higher discounts due to a severe crunch in the global supply chain.

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Quite a few high-volume models are under a long waiting period

Primarily, the disruption in supply chain is attributed to the semiconductor shortage automakers across the globe are dealing with. Both homegrown and foreign automakers are bearing the brunt of chip shortage and since cars nowadays have become advanced and tech-laden, they are witnessing major production delays. In fact, according to our dealer sources, quite a few high-volume models are under a long waiting period of six months or more. Moreover, a customer is not assured of timely delivery around the festive season period even if he's booked the car a few months earlier. Automakers also see festive season as good opportunity to recover the volume loss due to COVID-19, but even that target is unlikely to be met this year.