No festive cheer for auto dealers as retail sales nosedived by 18.21% during the 42-day festive period. According to the Vahan portal and FADA, auto dealers sold 20,90,893 units during the festive period compared to 25,56,335 units in the same period last year.
The festive period ranges from the first day of Navratri to 15 days post-Dhanteras, as there is a time lag of 10-12 days between delivery and registration.
According to FADA, this was the worst festive season in a decade for auto dealers as a semiconductor shortage in PV, and low demand for the entry-level 2W segment kept the celebrations at bay.
In terms of segments, except three-wheelers and commercial vehicles, which were up by 53% and 10%, all the other categories were in red with two-wheelers, passenger vehicles, and tractors down by -18%, -26%, and -23%, respectively.
Vinkesh Gulati, President, FADA, said, “We have witnessed the worst festive season in the last decade. Semiconductor shortage, which was already a full-blown crisis, showed its true colours when in spite of the above healthy demand, we could not cater to customers’ needs as SUV, compact-SUV, and luxury categories witnessed a huge shortage of vehicles. '
“On the other hand, entry-level cars saw subdued demand as customers in this category continued to conserve money due to their families’ healthcare needs,” he added.
As per FADA, the two-wheeler category continues to face the brunt of low sales, with the entry-level category being the biggest spoilsport.
The rural distress in retails coupled with frequent price hikes, triple-digit fuel prices and customers conserving funds for healthcare emergencies kept the demand low. In fact, walk-ins and customer inquiries were also ultra-lean during the said period.
“In commercial vehicles, while entry-level and small commercial vehicles have already grown post unlocking and due to intra-city goods movement, M&HCV is now showing strength due to low base and infrastructure projects coming up in different states. Buses as a category is yet to see any revival in demand,” Gulati added.
“With normalcy returning in business, the three-wheeler category has started to witness usual demand. This aided with the extremely low base of last year is also helping three-wheeler post healthy growth. It is noteworthy to mention that we are witnessing a tactical shift from ICE to EV’s as EV share in 3W has now crossed the 45% mark.”
Auto Retail Sales In Oct Fell By 5.33%
In terms of monthly retail sales, auto dealers sold 13,64,526 units in October 2021 compared to 14,41,299 units in the same month last year. On a YoY basis, the three-wheeler was up by 74%, and the commercial vehicle was up by 26%. On the other hand, Two-wheeler, passenger vehicles, and tractors fell by - 6%, -11% and -21%, respectively.
Two-wheeler inventory levels reach a 40-45 days period and are a cause of great concern for auto dealers. FADA hence requests two-wheeler OEMs to work towards bringing down the inventory to 21 days. Outlook
Even though the festive period is over, there is still a huge backlog of orders in the PV segment. 'If PV OEMs can realign supply with demand, we can still see a good year-end retail,' he said.
FADA requests two-wheeler OEMs to rationalise inventory. It also urges to roll out attractive schemes for customers to revive demand, especially in the entry-level category.
Inventory at the end of October ’21
o Average inventory for Passenger Vehicles ranges from 10-15 days
o Average inventory for Two – Wheelers ranges from 40-45 days