India’s auto sales fell 5.27% in September due to a lack of chips
The Federation of Automobile Dealers (FADA) said chip shortages will become less likely over the next two quarters, and as a result, car sales are likely to stagnate in the future.
India’s total vehicle retail sales on a sequential and annual basis in September 2021 were impacted by lower production due to semiconductor supply bottlenecks and longer waiting times. The data released by the Federation of Automobile Dealers Associations (FADA) on Thursday October 7th showed a 5.27% decrease in September 2021 compared to the same time last year. Vehicle retail sales decreased from 13,68,307 units sold in the corresponding month of 2020 to 12,96,257 units last month.
Similarly, last month’s total retail sales were down 13.50% from September 2019 (pre-pandemic). In September 2019, total retail vehicle sales were 14,98,585 units. At the segment level, retail car (PV) sales increased 16.32% in the month under review compared to September 2020. PV retail sales increased last month from 200,576 units sold in September 2020 to 233,308 units.
“At the beginning of this year’s Christmas season, the full-blown semiconductor crisis continues to hinder PV sales, as the number of vehicles at dealerships has dropped to record lows of 15-20 days during the current fiscal year. In view of the high demand in this segment, the long waiting time is still frustrating and keeps enthusiastic buyers at bay, ”said FADA President Vinkesh Gulati.
According to FADA, the two-wheeler (2W) category continues to play spoilers as the entry-level segment has yet to experience healthy growth. “The performance of this segment will now be decisive for 2W to return to the overall recovery path, as the dealer base increases to 30-35 days in anticipation of a good Christmas season. The semiconductor shortage has also started to affect the segment over 150cc, ”added Gulati.
The tricycle (3W) segment is now showing clear signs of a tactical shift from ICE (Internal Combustion Engine) to EVs (electric vehicles), as the ratio has reached a split of 60:40. As offices and educational institutions slowly open up, the electrification of 3Ws will pick up pace in the coming months, according to FADA.
FADA said that as India enters the 42-day holiday period starting today, the near-term outlook for this year’s holiday season will be mixed. While dealers have increased their inventory in the 2W category, PV inventory is lowest this fiscal year due to the ongoing semiconductor crisis.
FADA said the chip shortage is less likely to ease over the next two quarters. As a result, PV sales are likely to stagnate, even though original equipment manufacturers (OEMs) are running fresh starts to keep customers excited. “Given the skyrocketing fuel prices and declining purchasing power, entry-level customers in rural India are holding back from meeting their mobility needs,” noted FADA.
The Merchants Association notes that India’s vaccination campaign has achieved remarkable momentum, saying, “Coupled with a lower likelihood of a third wave in the near future and a gradual opening of offices and educational institutions, we expect a marginal recovery process to begin in the 2W Area. ”FADA has urged all 2W OEMs to put in place special promotional programs so they can kick-start 2W retail for a faster recovery.