Retail sales of passenger vehicles fell 4.5 per cent year-on-year to 281,666 units in January 2021 from 294,817 units, in January 2020, after two consecutive months of growth. Key reasons attributed behind the drop include high base effect and shortage of semiconductors.
According to the Federation of Automobile Dealers Associations (FADA) passenger vehicles sales stood at 294,817 units in January 2020.
Two-wheeler sales declined 8.78 per cent to 1,163,322 units last month, from 1,275,308 units in January 2020. Commercial vehicle sales slipped 24.99 per cent to 55,835 units, from 74,439 units a year ago.
Three-wheeler sales fell 51.31 per cent to 31,059 units last month, from 63,785 units in the year-ago period.
FADA President Vinkesh Gulati said that after witnessing a one off growth in December, January Auto Registrations fell once again by about 10 per cent YoY.
“Auto Industry clearly misjudged the demand which returned post lockdown. Industry’s under estimation of post-covid rebound along with chipmakers prioritizing higher-volume and more lucrative consumer electronics market has created a vacuum for semiconductors. This has resulted in shortage in supply for all categories of vehicles especially Passenger Vehicles even though enquiry levels and bookings remained high. New launches and SUV’s continued to see high traction and helped in restricting the overall PV registrations fall by a bigger margin”.
He said, the recent price hike undertaken by Auto OEMs also added to woos as Two Wheeler have become more expensive for lower and middle income class. Commercial Vehicle registrations were also hit due to vehicle financing still not back to normal and high BS-6 cost.”
According to FADA, average inventory for Passenger Vehicles ranges from 10 – 15 days, while for two-Wheeler it ranges from 30–35 days
The first budget of this decade stressed on making India an Aatmanirbhar Bharat. Union Budget 2021 finally brought smile for Auto Industry as its age old demand of bringing Vehicle Scrappage Policy (voluntary) saw light of the day. The final contours of the policy though awaited, will decide its attractiveness and popularity. This including announcement to induct more buses in public transport, increased infrastructure spending and building National Highways will play a pivotal role in reviving Commercial Vehicles segment over a longer period of time.
Last year, the Auto Industry was transitioning from BS-4 to BS-6 during Q4 FY’21. This saw huge discounts leading to higher sales and registrations. With a high base and continued shortage of semiconductors on one hand and gradual opening of academic institutes and business as usual along with Covid Vaccine’s effectiveness on the other, FADA continues to remain guarded in its optimism for Auto Registrations during Q4 of this financial year.