Auto Retails in September Down 13.5% Compared With Pre-COVID Month
Moneylife Digital Team 07 October 2021
Total vehicle sales during September this year decreased 5.3% on a year-on-year (y-o-y) basis; however, when compared the monthly sales with the pre-COVID period, overall retails continue to fall by 13.50%, says Federation of Automobile Dealers Associations (FADA).
 
In a release, Vinkesh Gulati, president of FADA, the apex body of the automobile retail industry, says, "As we enter the core of this year's festive season, the full-blown semiconductor crises continue to create hindrance in passenger vehicle (PV) sales as vehicle inventory at dealers end dip to record lows of 15-20 days during the current fiscal. With high demand in this segment, long waiting period continues to frustrate and keep enthusiast buyers in a fix."
 
According to FADA, the two-wheeler (2W) category continues to play spoilsport as the entry-level segment is yet to witness healthy growth. "This segment's performance is now becoming critical for the overall 2W to come back on the path of recovery as dealer inventory rises to 30-35 days in anticipation of a good festive. Semiconductor shortage has also started impacting the 150+ cc segment," it says.
 
The apex body of the automobile retail industry has requested all original equipment manufacturers (OEMs) in the 2W category to announce special schemes for demand revival in entry-level 2W or below 125cc segment as this segment continues to be a spoilsport.
 
All categories registered increased sales on the year-on-year (y-o-y) basis, mainly on a lower or almost nil base. During September this year, sales increased for three-wheelers (3W) by 51%, PVs by 16% and CVs by 47%. However, sales in 2W and tractors fell by 12% and 24%, respectively, data shared by FADA shows.
 
 
Mr Gulati says, "The 3W segment is now showing clear signs of a tactical shift from internal combustion engines (ICEs) to electric vehicles (EVs) as the ratio has hit a 60:40 split. With offices and educational institutions slowly opening up, electrification of 3Ws will gather greater momentum in months to come."
 
The CV segment is finally showing greater strength as all sub-categories continue to grow YoY. For the first time, medium and commercial vehicles (MCVs) also rises above the pre-COVID month of September 2019, the president of FADA pointed out.
 
During the first half of FY2021-22, auto retails sales were up 35% on a y-o-y basis, with the highest growth seen in the commercial vehicles (CVs) segment at 127%. However, compared to 2019, a pre-COVID year, overall retails are down by 29% and except tractors, which has grown by 19%, all the other categories continued to be in red this year.
 
 
With India entering the 42 days festive period beginning Thursday, FADA says, the near-term outlook for this year's festive season will be a mixed bag. "While dealers have increased their inventory in the 2W category, PV inventory is at the lowest during this FY due to the ongoing semiconductor crises."
 
"The chip shortage looks less likely to ease within next two quarters. As a result, PV sales are likely to stagnate even though OEMs are coming ahead with new launches to keep the customer excited. With skyrocketing fuel prices and a drop in purchasing power, entry-level customers in rural India are keeping themselves away from fulfilling their mobility needs," it added.
 
India's vaccination drive has reached a remarkable momentum, FADA says, adding coupled with a less likelihood of the third wave in the near future and offices and educational institutions opening in a phased manner, it anticipates a marginal recovery process to begin in the 2W space.
 
 
As of September 2021, dealer inventory levels for PVs and 2Ws remained in the range of 15-20 and 30-35 days, respectively.
 
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