Passenger vehicle sales up amid semiconductor shortage: FADA

Federation of Automobile Dealers Associations said the record high fuel price hikes will continue to have a negative impact on two-wheeler and commercial vehicle sales.

Even as domestic retail sales of passenger vehicles saw a double-digit growth in February, nearly half of the automobile dealers lost business due to non-availability of vehicles as global semiconductor shortage continued to impact production, the Federation of Automobile Dealers Associations (FADA) said on Tuesday.

Noting that the new wave of COVID-19 in certain States and high fuel prices dampened consumer sentiment, hitting the two-wheeler segment hard, FADA added that the record high fuel price hikes will continue to have a negative impact on two-wheeler and commercial vehicle sales.

As per the data shared by the industry body, total retail vehicle sales across all categories declined by 13.43% to about 14.99 lakh vehicles, mainly due to sharp fall in sales of two-wheelers (down 16.08% to about 10.91 lakh units), three-wheelers (fell nearly 50% to 33,319 units) and commercial vehicles (down 29.53% to 59,000 units).

Passenger vehicles and tractors, however, saw good growth. With a sales growth of 18.89%, the tractor segment continued its upward trajectory. FADA expects that tractor registrations will continue to outperform overall registrations in near term.

In February, passenger vehicle (PV) sales rose 10.59% to over 2.54 lakh units, albeit of a lower base of previous year when India was transitioning from BS-IV to BS-VI emission norms. “…The global semiconductor outage kept the waiting period of PVs as high as eight months. FADA showed that 50% PV dealers lost over 20% sales due to non-availability of vehicles,” the industry body said.

It attributed the “sluggish demand” in two-wheelers to the new wave of COVID-19 in some States. “Enquiry levels also narrowed as many educational institutions were still reluctant to open. Fuel prices are at its historic high…pressing brakes on sale of entry level price sensitive category,” it said.

Additionally, it said for commercial vehicle segment financing issues, negligible sales of passenger buses due to closure of educational institutes, and supply side constraints kept the registrations in deep red.

FADA added, “Consumer spending, which is the driving force behind India’s economy and accounting for 60% of the GDP, fell 2.4% showing signs of sluggishness despite the quarter being in the festive season. This also reflects that consumers are still uncertain and worried about their income and cautious about spending.”

India’s growth engine will only see full recovery depending on the pace of the world’s largest vaccination programme. A rapid increase in new COVID-19 cases will thus reduce the pace of recovery and hence impact overall Auto demand, it said.

The industry body also urged the government to hold diplomatic discussions with countries manufacturing semiconductors (Taiwan & other similar countries) so that the momentum which was built thus far in auto sales is not lost. “Overall, FADA continues to remain guarded in its optimism for vehicle registrations in March,” it said.

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