Car sales at pre-Covid levels but 2W sales playing spoilsport: FADA

Chip crisis sees passenger vehicle inventory at record 15-20 day low; poor demand for entry-level two-wheelers; three-wheeler segment seeing strong shift to electric.   

By Nilesh Wadhwa calendar 07 Oct 2021 Views icon5104 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

The first half of fiscal year 2022 has been a mixed bag for India Auto Inc, says apex dealer body FADA. Total retail sales in September 2021 were 12,96,257 units (-5.27% YoY) with all segments in the green except for two-wheelers and tractors. In terms H1 FY2022, auto retail grew by 35.2% at 71,85,561 units albeit on a low-year ago base, which is 29.39% lower April-September 2019 pre-Covid levels.

According to Vinkesh Gulati, President, FADA, “Auto retail in September has taken a pause as overall sales were down by 5%. During the first half of FY2022, while overall retails were up by 35%, the same was down by -29% when compared to 2019, a pre-Covid year. On a long-term basis, except tractors which grew by 19% and PVs which has almost reached pre-Covid levels, all the other segments were in the red. Two-wheeler sales continue to play spoilsport as the entry level segment is yet to witness healthy growth.”

He said the sales/performance of entry level two-wheelers is now becoming “critical for the overall two-wheeler segment to come back on the path of recovery as dealer inventory rises to 30-35 days in anticipation of a good festive.” Gulati also pointed out that the semiconductor shortage has also started impacting the 150+cc segment.

Gulati maintains his scepticism about the semiconductor shortage ebbing and its impact on the automotive industry is set to impact this year’s festive season. “The full-blown semiconductor crisis continues to create hindrance in PV sales as vehicle inventory at dealers end dip to record lows of 15-20 days during the current fiscal. With high demand in this segment, long waiting periods continue to frustrate and keep enthusiast buyers in a fix.”

Three-wheelers seeing strong shift to electric
Interestingly, FADA finds that the “three-wheeler segment is now showing clear signs of tactical shift from ICE to EVs as the ratio has hit a 60:40 split. With offices and educational institutions slowly opening up, electrification of three-wheelers will gather a greater momentum in months to come.”

As regards the commercial vehicle segment, the auto retail body finds that the “CV segment is finally showing greater strength as all sub-categories continue to grow YoY. M&HCVs for the first time also grew above the pre-Covid month level of September 2019.” 

Mixed-bag outlook for festive season
FADA says with India entering the 42 days festive period beginning today, the near-term outlook for this year’s festive season will be a mixed bag. While dealers have increased their inventory in two-wheelers, PV inventory is at the lowest during this financial year due to the ongoing semiconductor crises. The chip shortage is not likely to ease within the next two quarters. As a result, PV sales are expected to stagnate going ahead even though OEMs are coming ahead with new launches to keep the market buzzing.

“With skyrocketing fuel prices and a drop in purchasing power, entry level customers in rural India are keeping themselves away from fulfilling their mobility needs. India’s vaccination drive has reached a remarkable momentum. This, coupled with a less likelihood of a third wave in the near future, and offices and educational institutions opening up in a phased manner, we anticipate a marginal recovery process to begin in the two-wheeler space. FADA hence requests all two-wheeler OEMs to roll out special promotions schemes so that it can springboard retails for a faster recovery,” concluded Gulati.

Tags: FADA
Orbitsys Tech’s CRM solutions optimise dealer management for smaller OEMs in India

auther Autocar Pro News Desk calendar29 Jan 2023

Gurgaon-based dealer-networking solutions provider is enabling new OEMs to expand swiftly by using its cost-efficient, f...

Murugappa Group acquires electric tractor start-up Cellestial E-Mobility

auther Autocar Pro News Desk calendar27 Jan 2023

The Group’s EV arm TI Clean Mobility, which currently holds 69.96% of Cellestial E-Mobility, acquires the remaining 30.0...

Greaves Cotton partners UK’s Eta Green Power for e-powertrain technology

auther Autocar Pro News Desk calendar27 Jan 2023

Equipped with Eta Green Power’s EV technology, Greaves Electric Mobility will manufacture e-motors and motor controllers...