During the 42 days festive period between Navratri and Diwali, total vehicle retail sales were down 18% on a year-on-year (y-o-y) basis, while monthly sales in October fell 26.64% compared with a pre-COVID period, says Federation of Automobile Dealers Associations (FADA). The festive period started on 7th October and ended on 17 November 2021.
Data from the apex body of the automobile retail industry shows that, except three-wheelers (3W) and commercial vehicles (CVs), which were up by 53% and 10%, all the other categories were in the red, with two-wheelers (2Ws), passenger vehicles (PVs) and tractors down by 18%, 26%, and 23%, respectively.
In a release, Vinkesh Gulati, president of FADA, says, “We have witnessed the worst festive season in last decade. Semi-conductor shortage, which was already a full-blown crisis, showed its true colours. Despite healthy demand, we could not cater to customers’ needs as sports utility vehicles (SUVs), compact-SUV and luxury categories, which witnessed a huge shortage of vehicles. On the other hand, entry-level cars saw subdued demand as customers in this category continued to conserve money due to their family’s healthcare needs.”
Earlier in September this year, FADA had warned of a lacklustre festive season as inventory levels continued to dip due to the non-availability of the fast-moving variants.
In October 2021, total vehicle retail sales declined 5.33%. On an yearly basis, 3W sales were up 74% and CV was up 26%. During the month, two-wheeler, PV and tractor sales fell by 6%, 11%, and 21%, respectively.
According to Mr Gulati, the 2W category continues to face the brunt of low sales, with the entry-level category being the biggest spoilsport. He says, “The rural distress in retails coupled with frequent price hikes, triple-digit fuel prices and customers conserving funds for healthcare emergencies kept the demand low. In fact, walk-ins and customer inquiries were also ultra-lean during the said period.”
In the CV category, FADA says that while entry-level and small commercial vehicles (SCVs) have already grown post-unlocking and due to intra-city goods movement, medium and heavy commercial vehicles (M&HCVs) are now showing strength due to low base and infrastructure projects coming up in different states. Buses as a category are yet to see any revival in demand.
“With normalcy returning in business, the 3W category has started to witness usual demand. This aided with the extremely low base of last year and is also helping 3W post healthy growth. It is noteworthy to mention that we are witnessing a tactical shift from internal combustion engine (ICE) to electric vehicles (EVs) as EV share in 3W has now crossed the 45% mark,” the apex body of the automobile retail industry points out.
Even though FADA says the festive period is now over, there is still a massive backlog of orders in the PV segment. “If PV original equipment manufacturers (OEMs) can realign supply with demand, we can still see a good year-end retail,” it added.
FADA has requested 2W OEMs to rationalise inventory while also urging them to roll out attractive schemes for customers to revive demand, especially in the entry-level category.
As of October 2021, dealer inventory levels for PVs and 2Ws remained in the range of 10-15 and 40-45 days, respectively.