Auto Registrations in March Down 29% on Financial Woes Brought by COVID-19, Says FADA
With the shortage of semiconductors leading to an increase in waiting period for passenger vehicles (PVs) to seven months, vehicle registrations during March fell 29% compared with last year, but witnessed a growth of 10% over that in the past month.
Data shared by Federation of Automobile Dealers Associations (FADA), shows on yearly basis, registration of two-wheelers (2W), three-wheelers (3W) and commercial vehicles (CVs) unrelentingly fell in March 2021 by 35.26%, 50.72% and 42.20%, respectively.
In a release, FADA says, "Passenger vehicle waiting period continued to hold its ground and remained as high as seven months as scarcity of semiconductors remained put. About 47% PV dealers said that they lost more than 20% sales due to supply side constraints."
"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 2W 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," says Vinkesh Gulati, president of FADA.
He says, commercial vehicles continued to degrow on yearly basis. "High prices for Bharat Stage (BS)-6 vehicles, low finance availability, repayment pressure due to moratorium period getting over, were the few reasons for non-performance. The category showed growth in some markets or sub categories where government infrastructure spending has begun. Bus segment continued to suffer due to ongoing pandemic.”
According to the FADA president, 3W marketing is witnessing a tactical shift from internal combustion engine (ICE) to electric vehicles (EV). "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 equated monthly instalments (EMIs) due to poor income. This coupled with social distancing norms and educational institutions still closed are keeping riders away," he added.
According to data shared by the apex body of automobile retail industry in India, during March, vehicle registrations fell 28.64% on yearly basis, but grew 10% over those in February 2021. During the month, registrations for PVs increased 28.39% on low base from the same period last year when India started transitioning to Bharat Stage (BS)-VI emission norms from BS-IV and when the country went under lock-down. Tractors maintained their outperformance compared with the broader market and recorded an increase of 29.21% in registrations.
There was no significant change in dealer inventory days as PV and 2W inventory remained in the range of 10-15 and 30-35 days, respectively, FADA says.
While the second wave of COVID is not only spreading faster, it is trying to destabilise the growth which India has been able to achieve in last few months, the apex body of automobile retail industry says adding, "Any lockdown at this point will severely hamper the momentum which is getting built for auto industry to come out of the woods."
According to FADA, increase of COVID and fear amongst consumers is keeping them away from making high ticket purchase. It says, "The effects of the same can be seen in 2W category where inquiry levels are low. This coupled with semiconductor shortage will continue to hamper not only passenger vehicles but also two wheelers as anti-lock braking system (ABS) shortage is currently ringing alarm bells."
Commenting on registrations in April, the apex body of automobile retail industry says, this month comes with festivities like Ugadi, Gudi Padwa, Baisakhi and Poila Boishakh. "This coupled with marriage season is generally a high sales period. At this juncture, the second wave of COVID is not only spreading faster but is also trying to destabilize 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," it says.
Since Maharashtra contributes 10-11% of the auto retail, the current Lock-down will have catastrophic effect on overall sales for the month of April. Overall, FADA says it maintains extreme caution for April 2021 as Covid rises to newer highs.