‘January retail auto sales fall 11% on chip shortage, rural distress’

Increase in prices, Omicron wave hit two-wheelers, says FADA president Gulati

Automobile retail sales declined almost 11% last month, largely due to contraction seen in the passenger vehicle and two-wheeler segments on the back of semiconductor shortage and rural distress coupled with increase in prices, according to the Federation of Automobile Dealers Associations (FADA).

As per the data released by FADA, the total sales across categories declined 10.7% to 14,39,747 units last month from a year earlier. Passenger vehicle sales fell 10.1% to 2,58,329 units, while two-wheeler sales shrank 13.4% to 10,17,785 units. Tractor sales too slid 9.86% to 55,421 units.

“January continues to show weak performance as overall retails on a YoY basis…In spite of good demand, passenger vehicle continues to face the brunt of semiconductor shortage,” said FADA president Vinkesh Gulati said. “Coming to two-wheeler category, the rural distress coupled with price rise and omicron wave played a villain’s role for this segment,” he pointed out.

He added that with the revival in the economy, the commercial vehicle (CV) segment continued to show growth. CV sales grew 20.5% to 67,763 units in January.

“As India gets back on its feet post the third wave of COVID, we expect that auto retail will slowly turn positive. Semiconductor shortage is also showing some signs of easing as many PV OEMs are [giving assurance] of better dispatch.”

The federation added that rural India had generally been a key driver for two-wheeler and entry-level passenger vehicle segments and “the government’s plan for ₹2.3 lakh crore direct payment as MSP to farmers may work as a booster for two-wheeler, tractor and entry-level PV sales. The upcoming marriage season will also trigger some demand revival for the two-wheeler segment.”

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