Passenger Vehicle Retail Sales Skid 10% In January Due To Chip Shortage, Says FADA

The sales in passenger vehicle declined to 2,58,329 units last month, down 10.12 per cent from 2,87,424 units in January 2021

New Delhi: Retail sales of passenger vehicles in India slumped 10 per cent year-on-year (YoY) in January 2022, as the auto companies continued to suffer production loss amid semiconductor shortage, FADA said on Monday.

The sales in passenger vehicle declined to 2,58,329 units last month, down 10.12 per cent from 2,87,424 units in January 2021.

FADA President Vinkesh Gulati in a statement said, “In spite of good demand, passenger vehicles continue to face the brunt of semiconductor shortage, resulting in the absence of a healthy inventory.”

On the other hand, two-wheeler sales last month declined by 13.44 per cent to 10,17,785 units, compared to 11,75,832 units in January 2021.

Tractor sales stood at 55,421 units last month, down 9.86 per cent from 61,485 units in January 2021.

According to Gulati, rural distress coupled with price rise and third wave of Covid led to a drop in the sales.

However, sales of commercial vehicle sales saw growth of 20.52 per cent last month at 67,763 units, as against 56,227 units in the year-ago month.

“With the revival in the economy, the commercial vehicle segment continues to show YoY growth, especially in the HCV category. With increased infrastructure spending by the central as well as state governments, the overall commercial vehicle segment remains in momentum,” Gulati said.

Retail sales of three-wheelers grew by 29.8 per cent to 40,449 units in January 2022, as compared to 31,162 units a year ago.

The total sales across categories last month dropped by 10.69 per cent to 14,39,747 units from 16,12,130 units in January 2021.

The FADA president said that with the Omicron wave getting weak, the retail sales are going to turn positive slowly.

“Semiconductor shortage is showing some signs of easing as many PV OEMs assure of better dispatch. Hence, we expect vehicle availability to improve in the near future,” he said.

With the Union Budget stressing on developing 25,000 km of new highways, Gulati said that it will further push infrastructure spending, and thus, increasing sales of commercial vehicle.

“Rural India has generally been a key driver for the two-wheeler and entry-level passenger vehicle segment. With the government’s plan for 2.3 lakh crore direct payment as MSP to farmers, it may work as a booster for two-wheelers, tractor, and entry-level PV sales,” Gulati added.