The automotive retail sales in India have started feeling the pinch. In fact, for the month of February 2022, the overall auto retail sales at 1,374,516 units were in the negative compared to last year, as well as the pre-covid year.
In terms of segment wise-sales two-wheeler sales came at 983,358 units (-10.67%), passenger vehicle 238,096 units (-7.84%), tractor 50,304 units (-18.87%) and commercial vehicle at 63,797 units (7.41%).
Vinkesh Gulati, president, FADA said, “Indian auto industry during February continues to remain in red as total retails were down by -9.21% YoY and -20.65% when compared to February’20, a regular pre-covid month. The 2-wheeler segment is showing no signs of recovery as Bharat continues to play spoilsport. With cost of acquisition continuously going north, inquiry level remained weak. As corporates and educational institutions continued operating from home, urban demand also took a hit.”
He says, that even though the PV segment saw some launches and slight respite in supply due to better production, it was yet “not enough to meet customer demand”. Waiting period for passenger vehicles continue to remain “similar to what it was in last few months.”
In terms of commercial vehicle sales, while there was slight recovery it was yet not “at similar levels when compared to pre-covid months”. The slight recovery on yearly basis was visible majorly due to low base effect. “This coupled with increase in government’s infrastructure spending saw continued traction in HCV and Tipper segments. Fleet operators who were earlier being missed have slowly started purchasing vehicles,” added Gulati.
Russia-Ukraine war could have ripple effect
The auto dealer body says while the impact of omicron was seeming to be passing away and supplies showing signs of recovery, “it looked as if Indian Auto Industry was at the cusp of recovery until Russia invaded Ukraine. This will once again have ripple effects on the global automobile supply chain.”
“Russia is one of the largest producers of rare-earth metals especially Palladium, which is an essential metal for semi-conductors. Ukraine on the other hand is one of the biggest producers and exporter of Neon Gas, which is used in the manufacturing of semiconductors. Due the ongoing war, we once again fear the shortage in semi-conductors which will create additional supply side issues for PVs.”
With crude breaching $110 (Rs 8,141) mark, the government will not be able to hold prices of petroleum products for long. Post state election results, oil marketing companies will increase fuel prices by at least Rs 10-15. While this will act as an obstacle for two-wheeler sales, with educational institutions and offices now fully open and Gudi Padwa around the corner, we may see some increased interest in two-wheeler as well as the Bus segment (which has witnessed a long dry spell of almost 2 years).”
Till the time Russia – Ukraine conflict doesn’t come to an end, FADA has changed its outlook from ‘neutral’ to ‘negative’.
Data courtesy: FADA