Passenger vehicle retail sales drop 10% in January as chip shortage continues: FADA

Passenger vehicle retail sales declined 10 per cent year-on-year in January 2022, as the companies continued to suffer production loss amid semiconductor shortage, automobile dealers' body FADA said on Monday.

The passenger vehicle (PV) sales dropped to 2,58,329 units last month, down 10.12 per cent from 2,87,424 units in January 2021.

"In spite of good demand, passenger vehicles continue to face the brunt of semiconductor shortage, resulting in the absence of a healthy inventory," FADA President Vinkesh Gulati said in a statement.

Two-wheeler sales last month declined by 13.44 per cent to 10,17,785 units, compared to 11,75,832 units in January 2021.

Gulati said that rural distress coupled with price rise and omicron wave led to a drop in the sales in the segment.

Tractor sales stood at 55,421 units last month, down 9.86 per cent from 61,485 units in January 2021.

Commercial vehicle sales, however, witnessed a growth of 20.52 per cent last month at 67,763 units, as against 56,227 units in the year-ago month.

"With the revival in the economy, the commercial vehicle segment continues to show year-on-year growth, especially in the HCV category. With increased infrastructure spending by the central as well as state governments, the overall CV segment remains in momentum," Gulati noted.

Three-wheeler retail sales also grew by 29.8 per cent to 40,449 units in January 2022 as compared to 31,162 units a year ago.

The total sales across categories last month declined by 10.69 per cent to 14,39,747 units from 16,12,130 units in January 2021.

Gulati noted that with the Omicron wave getting weak, the retail sales are going to slowly turn positive.

"Semiconductor shortage is also showing some signs of easing as many PV OEMs assure of better dispatch. We hence expect vehicle availability to improve going further," he noted.

Gulati stated that with the Union Budget stressing on developing 25,000 kms of new highways, it will further push infrastructure spending, thus, increasing commercial vehicle sales.

"Rural India has generally been a key driver for the two-wheeler and entry-level passenger vehicle segment. With the government's plan for 2.3 lakh crore direct payment as MSP to farmers, it may work as a booster for two-wheelers, tractor and entry-level PV sales," he added.

The upcoming marriage season will also trigger some demand revival for the two-wheeler segment, Gulati noted.

"Overall, FADA changes its outlook from 'negative – neutral' to 'neutral' for the next couple of months," he stated.

Federation of Automobile Dealers Associations (FADA) said it has collected data from 1,386 out of 1,597 RTOs across the country.

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