Vehicle registration falls 16% across categories in December: FADA

Poor demands plagues two-wheelers, chip shortage derails PV sales; dealer body cautious of road ahead as various state govts once again announce Covid curbs

Vehicle registration across all categories fell 16.05 per cent year-on-year in December to 1,558,756 units, Federation of Automobile Dealers Association (FADA) said on Wednesday. Two-wheelers, which saw a sharp decline of 19.86 per cent, dragged the overall registration volumes, the apex body said. When compared with December 2019, the retail sales (registration) dropped 6.30 per cent YoY.

The dealer body remains cautious of the road ahead amid various state governments once again announcing Covid restrictions. Work and education from home have resumed and will have a negative effect for auto retail. With the fear of health care expenses rising again, the customers are shying away from closing their purchase decisions, it said.

The primary reason behind the fall is the semiconductor shortage which hasn’t allowed carmakers to give offers and discounts, said Vinkesh Gulati, president at FADA.

“Normally in December, manufacturers push their inventory with offers and discounts but since there was no inventory this time, we didn’t see such kind of things,” he said.

Gulati doesn’t expect the shortage of chips to go away soon which is now delaying delivery of cars to customers. “We are in constant touch with customers. Sometimes they go for a different model or are ready to wait but one thing that is coming up is that customers are postponing their decisions to buy a car,” he said.

Meanwhile, scooters and motorcycles continued to underperform compared to PVs. High cost of ownership, bad rural sentiment, work- from-home and the latest threat of Omicron continued to impact sales. The two-wheeler sales declined by 20 per cent YoY to 1,148,732 units during the month as against 1,433,334 units during the same period in 2020.

The rising trend continued for commercial vehicles with medium and heavy duty trucks outperforming the light commercial vehicles. The government’s push for infrastructure spending, especially road infrastructure, better freight rates, price hike announcement in January and a low base helped the overall segment close in positive double digits, FADA said.

High cost of ownership, bad rural sentiment, work from home and the latest threat of Omicron continued to impact sales, FADA said.

“The ground economic situation is not very good. Either people have lost jobs or income level has declined which is impacting the two wheeler sales. I don’t expect it to improve this year,” Gulati said.