The Federation of Automobile Dealers Associations (FADA) released its vehicle registration data for March 2021 on April 8.
As per the data released, March auto registrations continued to fall by -28.64 percent year-on-year (YoY) but grew 10.05 percent month-on-month (MoM).
Meanwhile, tractors and passenger vehicles (PV) sustained healthy momentum by growing 29.21 percent and 28.39 percent YoY, respectively, on a low base, transition from BS-IV to BS-VI and India going under lockdown last year due to the COVID-19 pandemic.
Tractors continued its dream run as rural incomes saw improvements after successive monsoons and good Rabi produce. If experts are to be believed, India will witness a normal monsoon for the third year in a row. This will further see tractors performing well in FY22, FADA President Vinkesh Gulati said.
Further, two-wheelers, three-wheelers and commercial vehicles (CV) fell by -35.26 percent, -50.72 percent and -42.20 percent on YoY basis, respectively.
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 last few months.
This coupled with high fuel prices and price increase acted as double whammy. It not only created a havoc in entry level customers mind but also kept them away from visiting showrooms, Gulati noted.
On MoM basis, two-wheelers, three-wheelers, CVs, PVs and Tractors grew by 9.54 percent, 14.15 percent, 14.15 percent, 10.11 percent and 12.60 percent respectively.
Passenger Vehicles remained at a seven-month high, as scarcity of semiconductors continued and 47 percent PV dealers said they lost over 20 percent sales due to supply side constraints.
There was no significant change in dealer inventory days as PV and two-wheeler inventory remained in the range of 10-15 and 30-35 days.
CVs continued to de-grow on YoY basis. High BS-VI prices, low finance availability, repayment pressure due to 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 ongoing pandemic, he added.
Near term outlook
FADA noted that festivals like Ugadi, Gudi Padwa, Baisakhi and Poila Boishakh and the marriage season in April and generally boosts sales in the month, but the second COVID-19 wave threatens to destabilise the growth that India has achieved over the past few months.
Any lockdown at this point will severely hamper the momentum which is getting built for auto Industry to come out of the woods, it added.
It further noted that increasing COVID-19 cases, fear among customers, and the semiconductor shortage will continue to hamper PV and two-wheelers.
Since Maharashtra contributes 10-11 percent of the auto retail, the current state lockdown will have catastrophic effect on overall sales for the month of April. Overall, FADA maintains extreme caution for the month of April as COVID-19 cases rise to newer highs, it added.