Opinion: New car, SUV waiting periods and the menace of ‘on’ money

    With waiting periods rising, a new trend of paying a premium for quicker delivery is slowly gaining traction in India.

    Published on Jun 03, 2023 07:00:00 AM


    Premium charge for delivery

    The chip shortage issue disrupted timelines in the automobile industry, and, just as manufacturers worked their way around this, the market bounced back, and how. Customers flocked to showrooms and four-wheeler sales – and waiting periods – have hit record highs.

    When it comes to some popular models, waiting periods keep swelling as manufacturers simply don’t have the production capacity to meet the demand. And, in the case of imports, they don’t have allocations to supply.

    Under such circumstances, getting timely delivery of the model of your choice takes precedence over seeking a discount, and dealerships are taking advantage of this. The attitude has shifted from ‘customer is king’ to ‘take it or leave it’. This isn’t limited to dealerships of any particular manufacturer, and is common across the board and country.

    Buyers are given absurd waiting periods, but impatient ones are offered ready stock that 'another person just happened to cancel’. Of course, the said car comes with an inflated price tag thanks to accessories, paint protection kits and other add-ons that the said customer had fitted. You can refuse this, of course, but another customer will snap it up and you're back on the waiting list.

    This is still somewhat justified as you are getting some tangibles in exchange for the premium and early delivery, but there's now the concept of ‘on’ or an ‘outright premium’ to jump the queue that's spreading in showrooms like a plague.

    Direct selling agents manage to ‘source’ vehicles with long waiting periods – from multiple dealerships across a particular state – and command a hefty premium over and above the price of the vehicle as their sourcing fee. These premiums range from Rs 50,000-80,000 on some budget CNG cars to between Rs 1 lakh-3 lakh on midsizers; and easily crosses Rs 10 lakh for some CBUs that cost over a crore to begin with. What’s more, some of these dealers are hand-in-glove with the agents who keep giving them regular business.

    Dealerships from smaller towns and cities, which get fewer allocations from the manufacturer, are the ones who suffer the most due to these agents, who source cars from larger towns and cities.

    So long as customers are willing to trust these agents, and pay the extra sum there’s little that can be done, and, while it may be extortion, there’s a monetary benefit to be had. With solid demand and rising input costs, manufacturers also increase prices regularly. So paying a premium to jump the queue also means you’re protected from the hiked price you'd otherwise have to cough up as prices are applicable at the time of delivery.

    Would you pay a premium to get early delivery for the model of your choice, or would you discourage this practice and wait? Let us know in the comments.

    Also See:

    Opinion: Revenge of the Pods

    Opinion: Why Gen Z is shying away from buying cars

    Vivekanand Pattar - 65 days ago

    IN 1998-99 and 1995. People in Our Area, Gave 10000 Premium ON to the HERO-HONDA Splendor. And Some people gave for MAX-100R from TVS-SUZUKI..

    Sharad Nangia - 111 days ago

    i rather not buy and wait - till then we have ola/uber .. gone are days when people looked having a car at status symbol. I rather buy a car which is readily available like the not so premium segment if i really need one immediately rather than paying the middle guys. if all do this, they eventually would go away

    unknown - 114 days ago

    Like Gen Z, I'd never want to buy a car at all...as such car prices are inflated and Govt charges an arm and a limb in the form of taxes & now we have to deal with these 'shadier' hoodlums...

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