The retail sales of automobile companies in India decreased by 10.70 percent in January 2022 as against January 2021, informed the Federation of Automobile Dealers Associations (FADA). FADA is an apex national body of the automobile retail industry in India representing 26,500 dealerships across India.
According to the data released by FADA on a YoY basis, three-wheeler and commercial vehicles were up by 30 percent and 20.5 percent while two-wheeler vehicles, PV, and tractors fell by 13 percent, 10 percent, and 10 percent respectively. The non-availability of Passenger Vehicles (PV) due to semi-conductor shortage continues to create problems. While Commercial Vehicles (CV) and especially Heavy Commercial vehicles (HCVs) continue to perform well in pockets, the two-wheelers continue to show weak performance due to rural India remaining in distress. The PV inventory continues to remain at a historic low of 8-10 days while two-wheeler inventory has reduced from alarming levels to 25-30 days.
The Government’s plan for developing 25,000 km of new highways will further build traction in India’s infrastructure spending and have a positive effect on the commercial segment, said FADA. Commenting on the performance of the association in January 2022, FADA President, Vinkesh Gulati said, “The month of January continues to show weak performance as overall retails on a YoY basis fell by 10.7 percent while three-wheeler and CV continue to remain in green with a growth of 30 percent and 20.5 percent.”
“The two-wheeler, PV and tractors closed in negative with degrowth of 13 percent, 10 percent, and 10 percent respectively. Auto retails weak performance of 18.4 percent compared to January 2020 (pre-COVID month) continues to show that India is yet to recover from the coronavirus pandemic’s effect which gripped the world two years ago,” he said. In spite of good demand, PV continues to face the brunt of semi-conductor shortage resulting in the absence of a healthy inventory.
Speaking about the two-wheeler category, the FADA President said that the rural distress coupled with price rise and the Omicron variant of COVID-19 negatively impacted this segment. With the revival in the economy, the CV segment continues to show YoY growth, especially in the HCV category. “With increased infrastructure spending by Central as well as State Governments, the overall CV segment remains in momentum. In fact, 55 percent of dealers in our internal survey said that they lost 10 percent of sales due to the Omicron variant,” he said.
Speaking about the near-term outlook, he added, “As India gets back on its feet post the third wave of COVID-19, we expect that Auto Retail will slowly turn positive. Semi-conductor shortage is also showing some signs of easing as many PV OEMs assure better dispatch. We hence expect vehicle availability to improve going further.”