Auto dealers continue to feel the wrath of the COVID-19 as the retail sales decline by 10.69% in the month of January 2022 at 14,39,747 compared to 16,12,130 units in the same month last year.
The data shared by the Federation of Auto Dealers Association (FADA) two-wheeler and tractor sales declined by 13.44% and 9.68% respectively which clearly shows the rural distress.
On other hand, commercial vehicles posted high double-digit growth of 20.52% due to intense push toward building infrastructure by the government. Similarly, three-wheelers retail sales registered a growth of 29.80% in the month of January 2022.
Vinkesh Gulati, President, FADA said, with the revival in the economy, the CV segment continues to show YoY growth, especially in the HCV category. With increased infrastructure spending by Central as well as State Governments, the overall CV segment remains in momentum.
He further added, “Auto retails weak performance of -18.4% compared to January’20 (a pre-covid month) continues to show that India is yet to recover from the covid effect which gripped the world 2 years ago. In spite of good demand, Passenger Vehicle continues to face the brunt of semi-conductor shortage resulting in a void of a healthy inventory. Coming to the two-wheeler category, the rural distress coupled with price rise and omicron wave played a villain’s role for this segment.”
Gulati also pointed out that about 55% of dealers in our internal survey said that they lost 10% + sales due to the Omicron wave.
| Segment | JAN’22 | JAN’21 | YoY % | JAN’20 | % Chg (JAN’20) |
| Two Wheelers | 10,17,785 | 11,75,832 | -13.44% | 12,76,616 | -20.27% |
| Three Wheelers | 40,449 | 31,162 | 29.80% | 63,805 | -36.61% |
| Passenger Vehicles | 2,58,329 | 2,87,424 | -10.12% | 2,94,955 | -12.42% |
| Tractors | 55,421 | 61,485 | -9.86% | 54,679 | 1.36% |
| Commercial Vehicles | 67,763 | 56,227 | 20.52% | 74,636 | -9.21% |
| Total | 14,39,747 | 16,12,130 | -10.69% | 17,64,691 | -18.41% |
Inventory at the end of January’22
- Average inventory for Passenger Vehicles ranges from 8 – 10 days
- Average inventory for Two – Wheelers ranges from 25 – 30 days
Outlook
As India gets back on its feet post the 3rd wave of Covid, we expect that Auto Retail will slowly turn positive. Semi-conductor 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.
Union Budget’22 stressed on developing 25,000 kms of new highways. This will further push infrastructure spending, thus resulting in an increase in Commercial Vehicle sales. Added to this, some traction is also being witnessed in replacement demand after a period of two years.
Rural India has generally been a key driver for 2-Wheeler and entry-level passenger vehicle segments. With Government’s plan for 2.3 lakh crore direct payment as MSP to farmers, it may work as a booster for 2-Wheeler, Tractor & entry-level PV sales. The upcoming marriage season will also trigger some demand revival for the 2-Wheeler segment.
Overall, FADA changes its outlook from ‘negative – neutral’ to ‘neutral’ for the next couple of months.
