Discover how the waiting periods for new cars and SUVs in India are leading to an escalating trend of paying a premium for quicker delivery. Understand the dynamics behind the 'on money' phenomenon in the Indian automobile industry.

A Response to Rising Demand and Disruptions

Due to disruptions caused by chip shortages, timelines in the automobile industry have seen significant impact. As manufacturers began recovering from this issue, there has been a surge in the market, resulting in unprecedented four-wheeler sales and soaring waiting periods for popular car models.

In the case of imported models, supply is constricted by limited allocations, further elongating the waiting periods. With customer attitudes shifting from seeking discounts to prioritizing quicker delivery, dealerships across the country have started charging a premium for expedited delivery.

Dealerships Exploit Rising Demand

Impatient customers are often offered a ready stock, an option supposedly opened up due to someone else's cancellation. However, these cars often come with an inflated price tag owing to additional features, accessories, and add-ons. Those refusing this arrangement are put back on the waiting list, while others willing to pay a premium secure their cars sooner.

The Menace of 'On Money'

A worrying trend, the concept of 'on' or an 'outright premium' for queue jumping, is increasingly spreading in showrooms. Direct selling agents, commanding hefty premiums for sourcing vehicles with long waiting periods, are playing a significant role in this phenomenon.

These premiums, serving as the agents' sourcing fee, can range from Rs 50,000 to Rs 80,000 for budget CNG cars and even exceed Rs 10 lakh for some high-end imported models. Many dealerships, especially those from smaller towns, suffer due to this practice as they receive fewer allocations from the manufacturer.

The Consumers' Dilemma

While this situation may seem exploitative, it can prove beneficial to customers who wish to avoid the hiked prices resulting from rising demand and increased manufacturing costs. The 'on money' paid upfront protects them from the increased price applicable at the time of delivery.

The pressing question for consumers is whether they are willing to pay a premium to get early delivery or choose to wait and potentially discourage this practice. The answer will play a crucial role in shaping the future of India's automobile market.