Retail sales of passenger cars fell 10% in January 2022 from a year earlier as companies continued to suffer production losses due to semiconductor shortages, auto dealer agency FADA said on Monday.

Passenger vehicle (PV) sales fell to 2,58,329 units last month, down 10.12% from 2,87,424 units in January 2021.

“Despite good demand, passenger cars are bearing the brunt of semiconductor shortages, resulting in low inventories,” FADA President Vinkesh Gulati said in a statement.

Two-wheeler sales fell 13.44% to 10,17,785 units last month, compared to 11,75,832 units in January 2021.

Rural woes coupled with rising prices and a wave of omicron have led to lower sales in the segment, Gulati said.

Tractor sales were 55,421 units last month, down 9.86% from 61,485 units in January 2021.

However, commercial vehicle sales rose 20.52% to 67,763 units last month, compared to 56,227 units a year earlier.

“As the economy recovers, the commercial vehicle segment continues to show year-on-year growth, especially in the HCV category. The overall CV segment maintains momentum as central and state governments increase infrastructure spending,” Gulati noted.

Retail sales of tricycles also increased by 29.8% to 40,449 units in January 2022, compared to 31,162 units a year ago.

Total sales in each category fell 10.69% to 14,39,747 units last month from 16,12,130 units in January 2021.

Gulati noted that retail sales will slowly turn positive as the Omicron wave wanes.

“Semiconductor shortages are also showing some signs of easing as many PV OEMs promise better scheduling. Therefore, we expect vehicle availability to improve further,” he noted.

With the federal budget emphasising the development of 25,000 kilometers of new highways, it will further boost infrastructure spending, thereby increasing commercial vehicle sales, Gulati said.

“Rural India has been a major driver of the two-wheeler and entry-level passenger vehicle market. The government plans to pay farmers Rs 2.3 crore MSP directly, which can be sold as two-wheelers, tractors and entry-level PV,” he said. added.

Gulati noted that the upcoming wedding season will also trigger some demand recovery in the two-wheeler market.

“Overall, FADA changed its outlook from ‘negative neutral’ to ‘neutral’ over the next few months,” he said.

The Federation of Automobile Dealers Associations (FADA) said it has collected data from 1,386 of the 1,597 RTOs nationwide.

Complete News Source : Business Standard