Car sales rise but 2-wheelers drag sector into the red: FADA data

According to FADA data, two-wheeler numbers dropped 16% in February, while passenger vehicles' grew 10.5%

Retail sales of passenger vehicles grew by a robust 10.59 per cent in February 2021, helped by the low base of last year, while for two-wheelers, it dropped by around 16 per cent.

This led to an overall fall in automobile sales by 13.43 per cent in February to 14,99,036 units from 17,31,628 units in the same period last year.

According to Federation of Automobile Dealers Association (FADA) data, passenger vehicles registered sales of 254,058 units as compared to 229,734 units a year ago. Sales had grown for the first time this fiscal year in December only to fall again in January.

The association said that the waiting period for passenger vehicles is now as high as eight months. This comes at a time when companies are facing challenges in the supply chain due to global semiconductor and container shortages. FADA urged the government to hold discussions with countries manufacturing semiconductors (Taiwan and others) so that the momentum that was built so far in automobile sales is not lost.

Overall, FADA continues to remain guarded in its optimism for vehicle registrations in March. Tractors, which have grown for much of last year, continued their stellar run with a near 19 per cent growth during the month. The commercial vehicle (CV) segment’s sales dropped by 29.53 per cent.

FADA president Vinkesh Gulati said while tractors continued to outperform the broader market, passenger vehicles witnessed double-digit sales growth on a low base of last year as India started transitioning from BS-IV to BS-VI.

FADA survey showed that 50 per cent passenger vehicle dealers lost over 20 per cent sales due to non-availability of vehicles. Average inventory for passenger vehicles ranges from 10-15 days, while for two-wheelers it is 30-35 days.

Two-wheelers continued to see sluggish demand as the new wave of Covid — in certain states — kept customers away. Enquiry levels also narrowed as many educational institutions are still reluctant to open. Fuel prices are at historic highs and have put a dampener on sentiment. This, in turn, has pressed the brakes on sales in the entry-level category, which is price sensitive.

Overall, the CV segment continues to be hit as availability of finance, negligible sales of passenger buses due to closure of educational institutes and supply-side constraints keep registrations in deep red.

Light commercial vehicles (LCVs), which saw good pent-up demand during the last few months post unlocking, have now started to fall flat. Gulati added, tippers and HCVs are, in turn, showing initial signs of revival as the government’s infrastructure push has started creating demand.

According to him, tractor registrations will continue to outperform overall registrations in the near term. “Fuel consumption, which had almost recovered from the lows of the pandemic, is again witnessing headwinds due to historic price hikes. This will have a negative impact on two-wheeler and CV sales,” said Gulati.