Auto cos in a bind as customers scramble for festive deliveries amid logistics crunch

NEW DELHI: The festive rush is there but car and two-wheeler companies, flush with orders post the price cuts after the GST reduction, are now facing a unique problem - ‘on time delivery’ of vehicles during the festivals.While customers are seeking delivery during the auspicious period of Dhanteras and around Diwali, companies are increasingly finding it challenging to do so due to shortage of trucks and trailers. The shortage of rare earth magnets, which happens despite initial assurances around normalisation of supplies from China, is also delaying production, particularly of electrics and two-wheelers.Industry officials told TOI that the sudden rush in demand for deliveries – across industries such as automobiles, FMCG, ecommerce, fashion and lifestyle – has put a huge pressure on the trucking industry with trucking fleets working round-the-clock to deliver across the length and breadth of the country. “Add to this the usual gifting rush around Diwali and you have a problem that is increasingly becoming very challenging to solve,” an industry official said.The pressure on the auto companies is telling as most customers generally want to take delivery on Dhanteras and Diwali. The pressure for delivery is not just in the bigger towns and cities, but even in smaller towns and rural.“The surge in festive demand has placed significant constraints on availability of trailers. We are working to improve dispatches to our dealer network within the constraints,” Nalinikanth Gollagunta, CEO, Automotive Division, M&M said.The same situation is being faced by Maruti which has seen a huge recovery in demand for small cars after the GST cut. “We have pending deliveries of as many as 2.5 lakh vehicles, and most people prefer it around the Diwali period. We are working overtime and are now using railways to ensure that dispatches happen faster and on time,” Partho Banerjee, senior executive officer (Marketing & Sales) at Maruti Suzuki, said.Amit Kamat, chief commercial officer at Tata Motors Passenger Vehicles, said the surge in demand for trailers and trucks began after Sept 22 as the new GST rates came into play. “We expect this surge to be temporary and are closely working with our logistics partners to expedite dispatches… Despite logistical challenges, we remain fully committed and are working tirelessly to expedite deliveries to our dealerships in time for Diwali celebrations.” Luxury players such as BMW are also feeling the pinch due to the sudden rush in demand. “Customers like to take the delivery on auspicious days like Dhanteras and Diwali. This year, demand for deliveries on these specific days is much higher as pent-up demand from Aug-Sept is also coming into play… When the bottleneck suddenly opened, yes, there were certain logistics challenges in the start, but it is streamlined now,” Hardeep Singh Brar, president and CEO of BMW Group India, said.In the two-wheeler industry, there is a similar challenge. Apart from logistics, companies are also plagued by the shortage of magnets. “The cut in retail prices has meant that there has been a sudden rise in demand for scooters and motorcycles. However, the rare earth magnet issue is hampering production. The sudden rush in bookings is leading to pressure on deliveries,” a top official of a leading company said, requesting anonymity.