Retail auto sales stay slow in January

Wholesale volume numbers for January were mixed amid supply-chain constraints and price hikes taken during the month.

By:February 10, 2021 8:24 AM
car sales, auto sales, automobile manufacturing, car prices, prices of carThe automotive sector’s vast value chain present across the entire Indian economy contributes nearly 40 per cent to India’s manufacturing GDP.

Retail sales of automobile slipped into negative territory in January, falling nearly 10% year-on-year after registering an increase in December. Sales of passenger vehicles (PVs), which have shown growth in some months during the fiscal, declined by 4.46% y-o-y. The fall has been attributed to a shortage of vehicles with manufacturers running out of semiconductors and other components, fading pent-up demand and recent price hikes. Experts said there was bit of a lull after the festive season.

The Federation of Automobile Dealers Associations (Fada) observed inventory for PVs was relatively low and down to 10-15 days. That would imply sales of available vehicles have been brisk; there have been some reports of long waiting list for some models. Typically, PV inventory for manufacturers like Maruti Suzuki and Hyundai Motor is about 30-35 days.

Manufacturers point out a shortage of key components like semiconductors has hit production and that is leading to longer waiting periods. Industry executives say Maruti Suzuki has bookings for around 2.15 lakh vehicles while Hyundai has bookings for 1 lakh cars; for any popular model a customer needs to wait for around 4-6 weeks longer than the normal period of 7-10 days. Based on these numbers, manufacturers maintain demand continues to be strong even after the festival period and say it will remain the same till March.

Wholesale volume numbers for January were mixed amid supply-chain constraints and price hikes taken during the month. The PV industry reported single-digit domestic volume growth led by a strong order book and inventory build-up. The domestic two-wheeler segment reported muted volume growth, though exports showed good momentum.

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