Slow recovery in the two-wheeler, commercial vehicle and three-wheeler segments in March has led to a drop of 28.64% in retail sales to 16,49,678 units, according to the data shared by Federation of automobile dealers association (FADA).
Last month, the two-wheeler segment registered a decline of 35.26% at 11,95,445 units, when compared to 18,46,613 units in the same month last year.
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 two-wheelers as it saw one of its steepest de-growth in the last few months. This, coupled with high fuel prices, acted as a double whammy. It not only created havoc in the entry-level customers mind but also kept them away from visiting showrooms.
The three-wheeler segment, on the other hand, witnessed a steep decline of 50.72% to close at 38,034 units in the last month of FY21, when compared to 77,173 units in the same month of last year. Similarly, the commercial vehicle segment saw a decline of 42.20% at 67,372 units in March 2021 when compared to 116,559 units in the same period last year.
Category-Wise Retail Sales: March 2021 Vs March 2020
| Category | March'21 | March'20 | %Change |
| Passenger Vehicle | 2,79,745 | 2,17,879 | 28.39% |
| Two Wheelers | 11,95,445 | 18,46,613 | -35.26% |
| Three Wheelers | 38,034 | 77,173 | -50.72% |
| Commercial Vehicle | 67,372 | 1,16,559 | -42.20% |
| Tractor | 69,082 | 53,463 | 29.21% |
| Total | 16,49,678 | 23,11,687 | -28.64% |
Tractors and passenger vehicles sustained a healthy growth momentum by growing 29.21% and 28.39% YoY. The growth in the passenger vehicle segment has largely come due to factors such as low base of last year, the transition from BS-4 to BS-6 and India going under total lockdown early in the financial year, thus creating a pent-up demand later.
About 47% of passenger vehicle dealers said they lost more than 20% of sales due to supply-side constraints.
Concerns Galore
Highlighting the trends of March 2021 retail sales, Vinkesh Gulati, President, FADA said, “Auto registrations for the month of March witnessed double-digit fall to the tune of -28.64% YoY, in spite of seven days of lockdown last year.”
He further added the three-wheeler segment is witnessing a tactical shift from ICE to EVs. While prices of vehicles are increasing due to BS-6 and metal prices, customers coming from the lower-income category are not able to re-pay EMIs due to poor income. This coupled with social distancing norms and educational institutions being still closed are keeping riders away.
“Commercial vehicles continued to de-grow on a YoY basis. High BS-6 prices, low finance availability, repayment pressure due to the moratorium period getting over, were the few reasons for non-performance. The category showed growth in some markets/sub-categories where Government infrastructure spending has begun. Bus segment continued to suffer due to the on-going pandemic, Gulati said.
According to FADA research, there was no significant change in dealer inventory days as PV & 2W inventory remained in the range of 10-15 and 30-35 days.
Outlook
The month of April comes with festivities like Ugadi, Gudi Padwa, Baisakhi and Poila Boishakh. This coupled with the 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 destabilise the growth, which India has been able to achieve in the last few months. Any lockdown at this point will severely hamper the momentum, which is getting built for the auto industry to come out of the woods.
Increase of COVID and fear amongst consumers with last year’s sight in mind has started keeping them away from making high ticket purchases. The effects of the same can be seen in the two-wheeler category where inquiry levels are low. This coupled with semiconductor shortage will continue to hamper not only passenger vehicles but also two wheelers as ABS shortage is currently ringing alarm bells.
Since Maharashtra contributes 10-11% of the auto retail, the current Lockdown will have a catastrophic effect on overall sales for the month of April, FADA said in a release. Overall, FADA maintains extreme caution for the month of April as COVID rises to newer highs.