Passenger vehicle sales down by 10% as semiconductor shortage impact continues

The Federation of Automobile Dealers Associations (FADA) said that the semiconductor shortage is showing some signs of easing, and it expects vehicle availability to improve going further.
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Total vehicle retail sales for the month of January fell by 10.7% on a year-on-year basis, according to latest data released by the Federation of Automobile Dealers Associations (FADA). Further, the vehicle retail sales decreased by 18% annually when compared to January 2020 (a regular pre-COVID month), and passenger vehicle sales witnessed an annual decline of 11.2%. 

“While 3W and CV continues to remain in green with a growth of 30% and 20.5%, 2-Wheeler, PV and Tractors closed in negative with degrowth of -13%, -10% and -10% respectively. Auto retail's weak performance of -18.4% compared to January’20 (a pre-covid month) continues to show that India is yet to recover from the covid effect which gripped the world 2 years ago,” FADA said in its release. 

“In spite of good demand, passenger vehicles (PV) continue to face the brunt of semiconductor shortage resulting in lack of a healthy inventory. As far as the two-wheeler (2W) category is concerned, the rural distress coupled with price rise and Omicron wave played a villain’s role for this segment,” said Vinkesh Gulati, FADA president. He added that 55% dealers in FADA's internal survey said that they lost 10%+ sales due to the Omicron wave. 

“As India gets back on its feet post the 3rd wave of Covid, we expect that Auto Retail will slowly turn positive. Semiconductor shortage is also showing some signs of easing as many PV OEMs (original equipment manufacturers) assure of better dispatch. We hence expect vehicle availability to improve going further,” the association said. 

With the Union Budget stressing on developing 25,000 kms of new highways, FADA said it expects this to further push infrastructure spending, thus resulting in an increase in commercial vehicle sales.

“Rural India has generally been a key driver for 2-Wheeler and entry level passenger vehicle segment. With government’s plan for 2.3 lakh crore direct payment as MSP to farmers, it may work as a booster for 2-Wheeler, Tractor & entry level PV sales. The upcoming marriage season will also trigger some demand revival for the 2-Wheeler segment,” the association added. 

FADA said it has changed its outlook from ‘negative – neutral’ to ‘neutral’ for the next couple of months.  

It said it has collected data from 1,386 out of 1,597 RTOs across the country.

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