Whalesbook
Supply Chain Breakdown
Vehicle deliveries are facing significant delays. Automakers are struggling with production because key components are scarce. The main problem is a shortage of liquified petroleum gas (LPG), which is essential for smaller component suppliers. These manufacturers use LPG for vital processes such as metal cutting, welding, and powder coating.
Some component makers have already reduced operations or stopped production altogether because of unreliable LPG supplies. These suppliers are crucial to the auto supply chain, providing parts to Tier-1 companies that then supply major manufacturers like Bajaj Auto, Tata Motors, and Mahindra & Mahindra. A Pune-based Tier-2 supplier noted, "There is total uncertainty around gas supply and no alternative." Restarting production after a halt is difficult, taking both time and money.
Dealer Impact
A recent survey by the Federation of Automobile Dealers Association (FADA) reveals how serious the situation is. More than 53 percent of dealers reported supply or dispatch problems. More than 17 percent are experiencing delays of three weeks or longer. While commercial vehicles are hit hardest, dealers selling passenger cars and two-wheelers are also seeing delays in specific models.
Dealers warn that current inventory levels, averaging only 27 days, could face severe strain if the disruption continues. FADA president CS Vigneshwar advised, "It is a good time for customers to book a vehicle because we don’t know if we will continue to have the exact specification they want." Popular models like the Tata Sierra, Tata Nexon, Mahindra Scorpio N, and Maruti Suzuki Ertiga already have waiting lists of two to six months. Strong retail sales, including a 21 percent year-on-year jump in passenger vehicle sales in March, have already used up much of the buffer stock.