Total vehicle retail sales decline by 10.7% yoy in January'22: FADA

7 Feb 2022 , 02:36 PM

The Federation of Automobile Dealers Associations (FADA) today released Vehicle Retail Data for January’22. On YoY basis, total vehicle retail for the month of January’22 decreases by -10.70% and 18% when compared to January’20 (a regular pre-covid month).

On a YoY basis, 3W and CV were up by 30% and 20.5%. 2W, PV and Tractors fell by -13%, -10% and -10% respectively.

Non-availability of Passenger Vehicles due to semi-conductor shortage continues to play spoilsport.

While CV and especially HCVs continue to perform well in pockets, 2W continues to show weak performance due to rural India remaining in distress.

PV inventory continues to remain at a historic low of 8-10 days while 2W inventory reduces from alarming levels to 25-30 days. With the Government’s plan for developing 25,000 kms of new highways, it will further build traction in India’s infrastructure spending and have a positive effect for CV segment.

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, FADA said today in the press note.

Commenting on how January’22 performed, FADA President, Mr. Vinkesh Gulati said, “The month of January continues to show weak performance as overall retails on a YoY basis, fell by -10.7%. While 3W and CV continues to remain in green with a growth of 30% and 20.5%, 2-Wheeler, PV and Tractors closed in negative with degrowth of -13%, -10% and -10% respectively. 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 void of a healthy inventory. Coming to 2-Wheeler category, the rural distress coupled with price rise and omicron wave played a villain’s role for this segment. With the revival in economy, CV segment continues to show YoY growth especially in HCV category. With increased infrastructure spending by Central as well as State Governments, overall CV segment remains in momentum. In fact, 55% dealers in our internal survey said that they lost 10% + sales due to the Omicron wave,” Vinkesh Gulati added.

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 segment. 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.