The automobile industry has faced the worst festive season this year, in the last decade, and segments like passenger vehicles (PVs) and two-wheelers (2W) have degrown by double digits on a year-on-year (y-o-y) basis.

According to data shared by the Federation of Automobile Dealers Associations (FADA) on Thursday, the 42 day festive season saw PV retail sales declining (26 per cent y-o-y) to 3,24,542 units this year as compared to 4,39,564 units in the same period last year.

Similarly, the two-wheeler sales also declined by more than 18 per cent y-o-y to 15,79,642 units during the festive period this year as against 19,38,066 units in the festive season 2020.

“Semi-conductor shortage which was already a full-blown crisis showed its true colours when in spite of an above healthy demand, we could not cater to customer’s need as SUV, compact-SUV and luxury categories witnessed a huge shortage of vehicles. On the other hand, entry-level cars saw subdued demand as customers in this category continued to conserve money due to their family’s healthcare needs,” Vinkesh Gulati, President, FADA said.

Also read: Semi-conductor shortage impacts premium two-wheeler sales

The 2W category continues to face the brunt of low sales with entry-level category being the biggest spoilsport. The rural distress in retails coupled with frequent price hikes, triple digit fuel prices and customers conserving funds for healthcare emergencies kept the demand low. In fact, walk-in’s and customer inquiries were also ultra-lean during the said period, he said.

However, the commercial vehicle (CV) and three-wheeler (3W) segments have witnessed a growth during the festive season against the last year’s festive period.

“In CV, while entry level and small CVs have already grown post unlocking and due to intra city goods movement, medium and heavy CV is now showing strength due to low base and infrastructure projects coming up in different states. Buses as a category is yet to see any revival in demand,” Gulati said.

With normalcy returning in business, the 3W category has started to witness usual demand. This aided with extreme low base of last year, is also helping 3W post a healthy growth, he said adding that “it is noteworthy to mention that we are witnessing a tactical shift from internal combustion engine (ICE) to electric vehicles (EVs) as EV share in 3W has now crossed the 45 per cent mark”.

Also read: Car sales skid again in October due to chip shortage; CV sales up

Sharing the near-term outlook, Gulati said that even though the festive period is now over, there is still a huge backlog of order in the PV segment. “If PV manufacturers are able to realign supply with demand, we can still see a good year end retail. It also urges to roll out attractive schemes for customers so that demand especially in the entry level category can be revived,” he added.

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