New Delhi: It’s a crisis of sorts. India is fast running out of many cars that remain sold out in the past few weeks and companies are grappling desperately to meet demand of these popular models and have asked their vendors and suppliers to do everything possible under the sky to allow manufacturing of every extra unit possible.

The unexpected demand and quick sales of entry-level and popular cars have been quite surprising. Maruti Suzuki Swift, DZire, and Baleno premium hatchback, Hyundai Creta and Venue SUV, Tata Tiago, Toyota Glanza and Mahindra Bolero & Scorpio enjoy different waiting cycles. These models are experiencing waiting periods in different variations across India, especially their entry-level variants that are generating the real demand from cash-conserving customers.

The demand is robust for entry-level cars and from rural markets and the newly launched SUV models from the major metros. Already many automakers are sprucing up production to meet the increased demand and fill the void that is expected to cripple sales and extend the current waiting period.

Indian market has always been ‘full of surprises’ and waiting for cars and SUVs amid the uncertain Covid times is something not a single automaker had visualised and expected. “It was just in May that we tried every trick in the trade to propel sales. Discounts, Digital and Flexible purchase with EMI-Free buying. And now just after a month waiting period across several models has become a new reality,” says a top marketing executive.

The current scenario is of demand and supply mismatch, where it’s more of a pent up demand that precedes production which is trying to meet the consumptionRakesh Srivastava, MD, Nissan Motors India

Hyundai Creta enjoys the longest waiting period of two months even as many of its models like the DCT automatic can be procured only after a gap of three months, while the Baleno premium hatchback requires a month of wait on its select variants and colours in all major markets. The scarcity of Baleno has also caused ripples in Toyota Kirloskar Motors that sells Glanza, the rebadged Baleno and is grappling to source its required numbers in July from its Japanese ally.

According to sources Maruti Suzuki is in the process of ramping up production to around 70,000 vehicles and possibly beyond in July after selling 52,300 units in the domestic market with the production expected in the range of 40,000 units last month. The company could be selling close to 90,000 cars in July even as many of its dealers are starving for supplies.

Though there are pockets of trouble like Chennai and Pune; major auto manufacturing hubs, which are hampering production and affecting supplies, but automakers are trying their best to get assured supplies. “The current scenario is of demand and supply mismatch, where it’s more of a pent up demand that precedes production which is trying to meet the consumption. There are limitations with regards to ramping up production, and barely 40 percent has been notched up. Once the production ramps up and stabilizes, we’ll be able to see a clearer picture with latent demand getting realised into the real market demand,” says Rakesh Srivastava, Managing Director of Nissan Motors India.

The demand curve is more bent for the luxury carmakers. For instance, the segment leader Mercedes-Benz is sold-out for many months for its newly launched SUV combo of GLC, GLE and the top-end GLS and is looking at increasing allocations. “We aren’t seeing any major challenges on the top-end front. All the models coming in over-a-crore price bands are insulated from the current Covid-induced market conditions, but ya, there are challenges for some models. We are sold-out and have almost three-months of waiting on our newly launched SUV range,” Santosh Iyer, vice-president Sales & Marketing at Mercedes-Benz India to ETAuto.

The situation has also been aggravated from the deficient manufacturing as the lack of adequate labour and supplies of components and spare parts has made production quite a grave challenge. In fact, the Suzuki Motor Corp. (SMC) superboss Osamu Suzuki has already urged its component and parts suppliers to boost output and build a sizable inventory to meet the expected demand from India’s largest carmaker despite rising coronavirus infections sweeping around the country and disrupting production.

The SMC patriarch has personally reached out to Maruti’s vendors and in a June letter asked them to prepare for the best of time for production and latent demand and respond to production recovery plan in July and build up enough inventories for the Indian market.

Already Maruti Suzuki India, the largest global subsidiary of SMC is ramping up production to meet demand, especially for its new generation models like Baleno and Swift. Its Executive Director and maverick Marketing & Sales Head told ETAuto, “Post Covid, and the shift over to new stringent BS6 regulations and following relatively large scale changes in the ‘Prices of different Fuel types’ … the demand pattern for various models can undergo a huge shift. At a time when all OEMs are scrambling to ramp up production we can expect a mismatch in demand-supply for some models till both supply and demand stabilises. This could well lead to a waiting period increase for some models.”

The waiting and incessant demand for many of the popular models have surprised many in the industry – automakers and dealers alike. Many in the business are facing huge scarcity of models. In fact, top manufacturers like Maruti Suzuki and Chennai-based Hyundai Motor India entire factory stock has been wiped off with dealers picking up every possible vehicle.

“While there’s no scarcity in the market currently, the demand could explode in the upcoming festive period. We have witnessed a huge pent-up demand spilling from the Navratra and other short festivals of March that was overshadowed by the nationwide lockdown and two months of closure. Now we are close to steady demand that should regularise over the next few weeks whereby we need to be ready with a strong arsenal of stock to meet customers aspirations and demand looking for safer and sanitised personal transport,” says a Delhi based dealer.

The scene of demand is more pronounced for hatchbacks and compact SUVs which offer higher value for money and lower cost of operations. In the entire post-covid melee the biggest beneficiary of the entire demand shift is Maruti Suzuki and South Korean combo of Hyundai & Kia Motors. Some residual benefits are also being accrued by Tata Motors and Mahindra with their vast rural exposure.

But the real beneficiary is customers who are able to buy and consume as per their needs. This might change in the future. That will bring down the current wave of high discounts and make transaction pricier. Meanwhile OEM’s need to manufacture more cars to beat this artificial trend and keep their network well stocked as the upcoming festival period would be the real test indeed.

Also Read: ETAuto Exclusive: Economic stress fails to bog down the Indian SUV lovers in June 2020