The Federation of Automobile Dealers Associations (FADA) stated on Friday that total vehicle retail for the month of February was down 9.21 per cent. It was down 20.65% when compared to February 2020. On a year-on-year basis, three-wheelers and commercial vehicle retail were up by 16.64 per cent and 7.41 per cent, while two-wheeler, passenger vehicle and tractor retail fell by 10.67 per cent, 7.84 per cent and 18.87 per cent respectively.
The association stated that the two-wheeler category continues to face the brunt of rural distress and high cost of ownership. Meanwhile, demand for PVs remain strong but the segment is facing the heat of the semiconductor shortage, which has impacted supplies.
FADA added that the ongoing Russia-Ukraine war has brought a new set of challenges for India auto retail as raw materials for semiconductors will disrupt supplies, along with crude breaching the $110 mark.
“The two-wheeler segment is showing no signs of recovery as Bharat continues to play spoil-sport. With the cost of acquisition continuously going north, the inquiry level remained weak. As corporates and educational institutions continued operating from home, urban demand also took a hit,” stated FADA President Vinkesh Gulati.
He said that even though the PV segment saw some launches and respite in supply due to better production, it was not enough to meet customer demand. Vehicle waiting period remained the same as it was in the past few months.
Gulati said that commercial vehicles sales saw a slight recovery on a yearly basis but still had a long way to go.
FADA added that after the Omicron wave, the auto industry had picked up but the Russia-Ukraine war could yet again play spoilsport. “Russia is one of the largest producers of rare-earth metals especially Palladium, which is an essential metal for semi-conductors. Ukraine on the other hand is one of the biggest producers and exporter of Neon Gas, which is used in the manufacturing of semiconductors. Due to the ongoing war, we once again fear the shortage in semi-conductors which will create additional supply side issues for PVs,” it said.
The association further added that with crude breaching the $110-mark, the government will not be able to hold the prices of petroleum products for long. “Post state election results, oil marketing companies will increase fuel prices by at least Rs 10-15,” it estimated.
While these might be an obstacle, interest in two-wheelers might see a spike as educational institutions and offices are gradually opening and Gudi Padwa too is round the corner.
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