After short December recovery, retail auto sales back in the red
NEW DELHI: After showing a one-time year-on-year growth in December 2020, retail auto sales have slipped back into the negative zone during the month of January 2021. According to the Federation of Automobile Dealers Associations (FADA), January 2021 auto registrations fell 9.66 per cent year-on-year to 15,92,636 units.
“Non-availability of vehicles due to scarcity of semiconductors, a fading pent-up demand and recent price hikes coupled with no festivities and auspicious days landed January registrations in negative zone,” said FADA in a statement.
All categories except Tractor were in the red last month. Passenger vehicle (PV) retail sales in January was down by 4.46 per cent to 2,81,666 units. However, compared to December 2020 (2,71,249 units), January PV sales were up by 3.82 per cent.
FADA President Vinkesh Gulati said, “The auto industry clearly misjudged the demand which returned post-lockdown. Industry’s under estimation of the post-covid rebound along with chipmakers prioritizing higher-volume and more lucrative consumer electronics market has created a vacuum for semiconductors. This has resulted in shortage in supply for all categories of vehicles especially Passenger Vehicles even though enquiry levels and bookings remained high”.
New launches and SUVs continued to see high traction during the month and helped in restricting the overall PV registrations fall by a bigger margin, added Gulati. Two-wheeler retail sales were down by 8.78 per cent y-o-y to 11,63,322 units while commercial vehicle sales was down by 25 per cent to 55,835 units for the month.
“The recent price hike undertaken by Auto OEMs also added to the woes as two-wheelers have become more expensive for the lower and middle income classes. Commercial Vehicle registrations were also hit due to vehicle financing still not back to normal and high BS-6 cost,” said Gulati. Dealer inventory for PVs continued to fall and has come down to a range of 10-15 days, while two-wheeler inventory stayed put at 30-35 days. In its near term outlook, FADA said the Centre’s scrappage policy is in right direction.