With production levels somewhat increasing owing to relatively better semiconductor supplies, the passenger vehicle (PV) retails are showing some signs of improvement. However, the two-wheeler (2W) segment continues to bear the brunt of muted demand, especially in rural areas, due to high ownership costs as well as high fuel prices.
Although the PV sales in January declined 10.12% year-on-year (y-o-y) to 2,58,329 units, they were 5.60% higher than December 2021 when 2,44,639 units were sold, data released by the Federation of Automobile Dealers Associations (Fada) on Monday showed.
The country’s largest carmaker Maruti Suzuki India has been witnessing a gradual rise in its production volumes. From as low as 81,278 units in September 2021, because of the semiconductor shortage, the production rose to 1,61,383 units in January.
At 10,17,785 units in January 2022, the 2W retails were not only down 13.44% y-o-y, but also slipped 11.40% on a month-on-month (m-o-m) basis.
The retail of tractors dropped 9.86% y-o-y to 55,421 units. However, three-wheelers (3Ws) and commercial vehicles (CVs) continued their growth trajectory rising 29.80% y-o-y to 40,449 units and 20.52% y-o-y to 67,763 units, respectively. The LCV sales witnessed a jump of 16.46% y-o-y to 40,343 units, while the MCV sales increased 17.11% y-o-y to 4,093 units and the HCV sales rose 41.12% y-o-y to 20,279 units.
“Basis the release by Fada on Monday, its amply clear that PV retails are still getting impacted on account of semiconductor shortages impacting the production of OEMs and thereby impacting channel inventory at PV dealerships. 3Ws and CVs (largely MHCVs) continue to show gradual improvement on account of recovery in economic activities and low base of last year,” said Hemal Thakkar, director, Crisil Research.
“2Ws still continue to struggle as they post a decline of 13% in retails with a higher offtake decline. This is the third consecutive month of a similar trend which also means there is continuous inventory correction happening and retails of 2Ws are genuinely slowing down, which is a concern. Tractors continue to be impacted largely on account of the high base of last year,” he added.
According to Fada, the PV inventory at the end of January 2022 was at a ‘historic low’ of 8-10 days. On the other hand, the 2W inventory has come down to 25-30 days from ‘alarming levels’ of 40-45 days in October 2021.
