News: Automobile Sector performance

The automobile sector struggles to revive from the semi-conductor shortage & pandemic dark cloud. Based on the data shared on VAHAN by FADA (Federation of Automobile Dealers Association) January recorded a 10% degrowth. The passenger vehicle registered 2,58,329 units in January 2022, whereas, the 2 wheeler sector saw a 13% drop in sales to 10,17,785 units in January 2022 compared to 11,75,832 last January.

January 2022 Sales

Moreover, the total vehicles registered in January saw a drop of 11% to 14, 39, 747 units compared to January 2021. Further, only the 3-wheelers & commercial vehicles saw a marginal growth.

The Automobile retail sector performed poorly YoY basis to a negative 10.7%. Whereas the 3 wheeler recorded 30% & commercial vehicles showed 20.5% growth. Considering January 2020 (before Pandemic) performance the sector recorded negative 18.4% degrowth. Resulting in the Indian automobile sector still being impacted by the pandemic & yet to recover from the 2 years loss.

Even though the demand for vehicles especially commercial vehicles is promising, the shortage of semi-conductors remains to be a major hurdle for inventory. Whereas the 3rd wave (Omicron) & increased price hampered the 2 wheeler demand in the rural sector. Stated the FADA President – Shri Vinkesh Gulati.

The Medium Commercial Vehicles (MCV) recorded 20.5% growth. The commercial vehicle sector records YoY growth largely the Heavy Commercial Vehicles category, based on the economic revival. As the Central & State governments have been heavily investing in infrastructure, has resulted in demand for commercial vehicles. Further, Mr. Gulati stated 55% of dealers lost revenue in sales due to the 3rd wave based on the internal survey.

However, as per the Union Budget 2022-23, the Finance Minister Shri Nirmala Sitharaman announced Pradhan Mantri Gati Shakti. Further, the minister added, 25,000kms new highways shall be built for better connectivity & ease of transportation. Eventually resulting in a boost for the Commercial Vehicle segment.

Conclusion

The Automobile sector is desperately looking for an endemic to the semi-conductor shortage issue & revival of the 2 years loss.
Hope the new FY brings some light of hope for the distressed sector.