No revival! Retail automobile sales crash 28.6% in March

No revival! Retail automobile sales crash 28.6% in March

The figures for March, which has come at a time when Covid cases are once again rising and the country is in the grip of a second wave, only points towards a darkening of the clouds


  • March auto registrations fell by a steep 28.64% YoY but grew 10.05% MoM
  • Tractors and Passenger Vehicles were the only two segments to register a growth at 29.21% and 28.39% YoY respectively on a low base
  • Sale of two and three wheelers and commercial vehicles fell by 35.26%, 50.72% and 42.20% respectively clearly indicating the revival is not homogenous
  • With Covid cases on the rise, FADA said any lockdown at this point will severely hamper momentum in the segments that are witnessing growth

Retail sale of automobiles registered a steep 28.64 percent decline at 16,49,678 units in March 2021 over the same month last year. This is the worst performance for the industry during a month since July last year when the economy was still limping out of lockdown.

Sales had grown by 11 percent in December raising hopes of a sustained revival in demand which had been quickly snuffed out in January and February which saw double digit declines. The figures for March, which has come at a time when Covid cases are once again rising and the country is in the grip of a second wave, only points towards a darkening of the clouds.  

Two-wheelers that account for bulk of the automobiles in the country saw a 35.26 percent drop at 11,95,445 units while three-wheelers registered a 50.72 percent decline at 38,034 units and commercial vehicles down 42.2 percent at 67,372 units. This put to shade the good momentum seen in passenger vehicles which grew 28.4 percent at 2,79,745 units and tractors, up 29.2 percent at 69,082 units.

"Auto Registrations for the month of March witnessed double digit fall to the tune of -28.64% YoY, in spite of 7 days of lockdown last year," said Vinkesh Gulati, president, Federation of Automobile Dealers Federation (FADA).  "According to Pew Research, financial woes brought by Covid-19 have pushed about 32 million Indians out of the middle class, undoing years of economic gains. This had its impact on 2-wheelers as it saw one of its steepest de-growth in last few months. This coupled with high fuel prices and price increase acted as double whammy. It not only created a havoc in entry level customers mind but also kept them away from visiting showrooms."

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Gulati added that passenger vehicle sales would have been even higher had the industry not been constrained by supply side issues particularly the global shortage of semiconductors.

"Global shortage of wafers which is an input for semiconductor, continued to linger around and kept PV waiting period as high as 7 months," he said. "According to our survey, 47% PV dealers said that they lost more than 20% sales due to supply side constraints." The steep fall in sale of three wheelers has been attributed to a shift from combustion engines to electric, while commercial vehicles were hampered by high prices, low finance availability and repayment pressure with the moratorium period getting over.

"While prices of vehicles are increasing due to BS-6 and metals prices, customers coming from lower income category are not able to re-pay EMI's due to poor income," Gulati said. For the near future, low base effect from last year which will kick in from this month will prop up numbers but the second wave is causing uncertainty in the minds of the consumers.

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"The month of April comes with festivities like Ugadi, Gudi Padwa, Baisakhi and Poila Boishakh. This coupled with marriage season is generally a high sales period," he said. "At this juncture, the second wave of Covid is not only spreading faster but is also trying to destabilise the growth which India has been able to achieve in last few months. Any lockdown at this point will severely hamper the momentum which is getting built for Auto Industry to come out of the woods."

Despite the challenges, the mood of the dealer community has generally turned positive. Nearly 80 percent of the dealers said the sentiment was either good or neutral. The inventory levels for passenger vehicles and two-wheelers was also on the lower side of just 10-15 days and 30-35 days respectively, which is a good indicator.

ALSO READ: Domestic car industry ends FY21 with a bang; March sales double over last year

Published on: Apr 08, 2021, 10:54 AM IST
Posted by: intern five, Apr 08, 2021, 10:54 AM IST