No (auto)matic discounts this Diwali

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The revival of the economy crucially hinges on the revival of domestic consumption that has been the main driver of the economy. Economists and marketers are unanimous that consumption will get a boost during the impending festival season when most companies are going to lure consumers with concessions on virtually every product. It is difficult to walk a few feet in a shopping zone in any city or any shopping mall without being bombarded by the word discount. From apparel to shoes, personal care products to real estate, it’s raining discounts everywhere.

However, the one high value item that is perhaps not going to be offered on much discounts is automobile. Not because automobile manufacturers don’t want to sell, but because they are themselves facing quite a few challenges. One, automobile majors are facing supply constraints. With lockdown in Malaysia, chip makers cannot supply chips that are one of the critical parts of a car. Two, automobile majors are hiking prices just before the festive season. While market leader Maruti is hiking prices for the third time this year, mostly due to rising input costs, it might embolden other companies to revise prices. All metal parts – both ferrous and non-ferrous – are supposed to be expensive with the global rally in meta prices.

Worse, semi-conductor supply shortage has created such a situation that if consumers want to shell out cash, they cannot buy that dream car to ride during the festive season. The waiting period for cars is now running into months due to the chip shortage. Major companies are even cutting down on production. Ever since the abolition of licence raj never did the Indian consumer face this long waiting period to buy a car.