Vehicle retail sales decline by 3% in November

The automobile retail sales in November continued to remain in the negative zone despite Diwali as well as marriage season coinciding in the same month even as unwanted rains in Southern States further spoiled the party, Federation of Automobile Dealers Associations (FADA) said on Wednesday.

Unless rural India starts showing signs of strength, overall retail sales will continue to remain weak, the industry body said in its monthly data report.

According to its latest data, passenger vehicle (PV) sales have declined by more than 19 per cent year-on-year (y-o-y) to 2,40,234 units as compared with 2,98,213 units in November 2020.

“PV continues to face the brunt of semi-conductor shortage. While the new launches are keeping customer’s interest high, it is only the lack of supply which is not allowing sales to conclude. The extended waiting period is now starting to make customers jittery and this may lead to loss of interest in vehicle buying,” Vinkesh Gulati, President, FADA said.

Two-wheeler (2W) sales improved a bit although still in the red at 14,33,855 units last month as compared to 14,44,762 units in the year-ago period.

“While the 2W segment saw almost at par sales compared to last year, overall sentiment remained low as marriage season also didn’t help in revival except in one or two States. Apart from this, crop loss due to incessant rains and flood in southern States, high acquisition price as well as fuel costs kept the customers away,” Gulati said. Further, there are no signs of increase in inquiry levels which is a bigger cause of concern, he said.

Traction in CV segment

However, both the three-wheeler (3W) and commercial vehicle (CV) segments saw retail sales grow in November.

“The CV segment continues to see traction in medium and heavy segment. This aided by low base resulted in double digit growth. The bus segment is still witnessing a dry run as educational institutes continue to remain closed. With diesel prices at record highs, supply of CNG vehicles is not able to meet the demand. Tight liquidity and unavailability of finance for customers who availed moratorium are also acting as sales barrier,” he said.

Overall, the total registrations last month stood at 18,17,600 units, down 2.7 per cent y-o-y from 18,68,068 units in November 2020.

FADA said the new variant of Covid ‘Omicron’ will further impact the overall vehicle demand as educational institutions and offices which were planning to reopen fully have once again deferred their plans and are allowing work/ study from home.

“Price rise due to high input costs and high fuel costs are continuing to add customers woes. FADA is hopeful that the chip shortage will ease in times to come and therefore reduce waiting period of vehicles and help in increasing sales. Overall, we remain extremely cautious and hope that India does not see a third wave with the new Covid variant,” Gulati added.

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