Retail sales in passenger vehicles grew by a robust 10.59 percent in February helped by a low base of last year when the market was getting ready for the transition from BS IV to BS VI emissions regime. Sustained weakness in two-wheelers, which declined by over 16 percent however pushed the overall automobile sales down by 13.43 percent.
Data collated by Federation of Automobile Dealers Association showed passenger vehicles registered sales of 254,058 units last month, which indicated clear momentum in the revival story. Sales had grown for the first time in this fiscal in December only to decline again in January.
What is more heartening, it was despite the global semiconductor shortage that created supply-side constraints for manufacturers. FADA said waiting period for PV is now as high as 8 months. At the same time, tractors that have grown for much of last year, continued their stellar run with a near 19 percent growth during the month.
The good news, however, ends there. Two-wheelers, which comprise the biggest segment in the market in terms of volumes, registered a steep 16.08 percent decline at 10,91,288 units. Commercial vehicles also declined by 29.53 percent at 59,020 units, while three-wheelers were down 49.65 percent at 33,319 units.
"Auto registrations continued to fall in double digits by -13.43% YoY in the month of February. While Tractors maintained their outperformance compared to the broader market, Passenger Vehicles witnessed double digit growth on low base of last year as India started transitioning from BS-4 to BS-6 emission norms," said Vinkesh Gulati, President, FADA. "This coupled with the global semiconductor outrage kept waiting period of PV as high as 8 months. FADA Survey showed that 50% PV Dealers lost 20% + sales due to non-availability of vehicles."
Gulati said fresh wave of Covid cases in a few states and high fuel prices have played spoilsport in the two-wheeler segment. "Two-wheelers continued to see sluggish demand as the new wave of Covid in certain states kept customers away. Enquiry levels also narrowed as many educational institutions were still reluctant to open," he said. "Fuel prices are at its historic high and have put a dampener in sentiments. This in-turn has pressed the brake on sale of entry-level price-sensitive category."
India's economy resurfaced to growth territory in the third quarter of FY20-21, clocking 0.4 percent rise in the GDP. India's farm sector remained resilient, clocking a 3.9 percent growth in Gross Value Added (GVA) to the economy, after recording 3.3 percent and 3 percent rise in the first two quarters. FADA said this will translate into good tractor sales in future, at least in the near term. The outlook for two-wheelers, however, remains hazy.
"The fuel consumption which had almost recovered from the lows of pandemic is once again witnessing headwinds due to historic price hikes. This will have a negative impact on 2W and CV sales," Gulati said. "Consumer spending, which is the driving force behind India's economy and accounting for 60 percent of the GDP, fell 2.4 percent showing signs of sluggishness despite the quarter being in the festive season. This also reflects that consumers are still uncertain and worried about their income and cautious about spending."