The Federation of Automobile Dealers’ Associations (FADA) said that the delta variant of COVID-19 and the possibility of a third wave continue to pose a threat to the auto sector’s recovery.

Cars parked in showroomPicxy / Neeraz Chaturvedi
Money Automobiles Monday, August 09, 2021 - 18:33

Total vehicle sales for the month of July have registered an increase of 34.12% on a YoY (year-on-year) basis, and all categories were in the green with two-wheelers (2W) up by 28%, three-wheelers (3W) up by 83%, passenger vehicles (PV) up by 63% among others, according to a report by the Federation of Automobile Dealers’ Associations (FADA).   

“With the entire country now open, July continues to see robust recovery in Auto Retail as demand across all categories remains high. The low base effect also continues to play its part. PVs witness high demand especially with buzz around new launches and compact SUV segments,” said FADA President Vinkesh Gulati. However, the waiting period for a vehicle due to supply-side constraints has been persisting for quite a few months and is now becoming a deep-rooted issue for original equipment manufacturers, he added. 

In July, among passenger vehicles, Maruti Suzuki India Ltd registered sales of 1,14,294 vehicles, garnering 43.67% of the market share; among two-wheelers, Hero Motocorp Ltd had sales of 4,01,904 vehicles, garnering 35.48% of the market share; while among three-wheelers, Bajaj Auto Ltd recorded sales of 10,039 vehicles, garnering 35.98% of the market share. 

“The 2W segment continues to see positive demand YoY, the rate of recovery remains sluggish as customers at the bottom of the pyramid suffer with poor disposable income and rural markets where COVID-19 cases were high during the second wave,” according to FADA. When compared to pre-COVID months, the gap in auto retail sales has started narrowing and is now at -13% in relation to July’19, FADA data showed. 

Outlook

“The month of August begins on a positive note as demand and enquiry levels continue to improve across all categories. With IMD forecasting a normal monsoon during August-September period, sowing operations will pick up gradually. This will have a rub off effect on rural sales especially in the Tractor segment,” FADA said in a statement. 

However, the global semiconductor shortage is now becoming a serious problem for the PV segment which is now above the pre-pandemic mark, according to FADA, which has been raising a red flag for quite some time on demand-supply mismatch. 

In an internal survey conducted by FADA, 60% of dealers of the PV segment said that they have at least two months waiting period for select variants. Another 35% of dealers said that the waiting period is more than four months among select variants. 

FADA added that the delta variant of COVID-19 and the possibility of a third wave continue to pose a threat to the auto retail sector’s recovery with India entering the festive season months. 

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