Logistics Shortage Dampens Festive Auto Sales Rush

The Indian auto sector is battling an unprecedented festive season predicament -- high consumer demand coupled with inadequate logistics. After recent Goods and Services Tax (GST) reductions led to lower vehicle prices, automobile and motorcycle manufacturers are struggling to meet delivery timelines as buyers expect their purchases before Dhanteras and Diwali festivities, says a report by Times of India.

Logistics Shortage

Customers are requesting deliveries to coincide with Dhanteras and Diwali celebrations, but manufacturers are unable to fulfill these expectations owing to an acute shortage of commercial transport vehicles including trucks and trailers. Additionally, the scarcity of rare earth magnets continues to hamper manufacturing operations, especially for electric vehicles and motorized two-wheelers, contradicting earlier projections about supply stabilisation from Chinese sources.

Multi-Industry Demand And Transport

Even as order books swell across all vehicle categories, automakers are confronting insufficient availability of trucks and trailers -- essential for moving finished products from manufacturing facilities to retail outlets. 

The situation worsens due to limited supplies of rare earth magnets, which are crucial components in electric motors, thereby slowing down production lines for EVs and two-wheelers despite prior commitments regarding normalised supply chains from China.

The report quoted industry representatives as saying that the unexpected spike in consumer demand which is affecting automobiles, consumer packaged goods, online retail, and lifestyle products simultaneously has pushed the transportation infrastructure beyond capacity. 

"Add to this the usual gifting rush around Diwali, and you have a problem that is increasingly becoming very challenging to solve," an industry insider was quoted as saying.