Chip crisis, Covid crimp retail: FADA

Vehicle retail sales continue to be in the slow lane. As per the recent FADA data, the overall auto retail came at 1,558,756 units, compared to 1,856,869 units a year ago. In terms of segment wise sales, the two-wheeler retail came at 1,148,732, which is a decline of 20 percent YoY and MoM respectively. The passenger vehicle segment has seen a 11 percent decline and tractor sales are down too.  

Traditionally, December sees higher sales thanks to OEMs offering best discounts to clear the inventory but the impact of the semiconductor crisis is clearly visible.

Vinkesh Gulati, president, FADA pointed out, “Retail sales continued to disappoint thus wrapping up an underperforming calendar year. With semi-conductor shortage continuing to play spoilsport, PV sales inspite of huge bookings, closed in red. Dealers however saw slight ease in vehicle supply thus giving some hope of improvement. The two-wheeler segment however was on a different trajectory when compared to PV. High cost of ownership, bad rural sentiment, work from home and the latest threat of Omicron continued to impact sales.”

In the CV segment, sales continue to rise with M&HCV outshining LCVs. The government’s push for infrastructure spending especially road infrastructure, better freight rates, price hike announcement in January and a low-year ago base helped CVs post positive double digits.

The country is once again under the grip of third wave of Covid. Various state governments have once again announced restrictions to contain its spread. Work from home and online schools have resumed and Gulati sees it impacting auto retail negatively. With the fear of health care expenses rising again, the customers are expected to shy away from making fresh purchases.

With IIT Kanpur predicting the peak of Omicron sometimes in 1st week of February, FADA says it will remain extremely cautious over the next 2-3 months.