Auto retail sales continue to remain in slow lane in February

Automobile retail in the country continued to perform lower than a year ago due to reasons like downbeat rural sentiment, a shortage of semiconductors, high fuel prices and a sharp increase in prices of vehicles over the past couple of years.

Vehicle registration with regional transport offices (RTO) were down 9% year-on-year in February, led by a sharp dip in two-wheeler and car sales. Automakers in India do not disclose retail sales numbers and hence registration numbers are used as a proxy.

“The two-wheeler segment is showing no signs of recovery as Bharat (rural India) continues to play spoil-sport,” said Vinkesh Gulati, president of the Federation of Automobile Dealers’ Associations (FADA), a lobby for vehicle retailers.


The data were put together by FADA from the road transport and highways ministry’s VAHAN platform. The data are incomplete as only 1,391 out of 1,600 RTOs in the country are on the VAHAN platform. But they paint an accurate picture in terms of trends.

The demand for two-wheelers has been tepid for the past few months due to reasons like poor rural sentiment, companies allowing work from home and high fuel prices. The acquisition cost of two-wheelers has gone up by more than 20% in the past couple of years, further denting demand.

The passenger vehicle (PV) or car segment has a totally opposite problem. There are plenty of buyers for new cars. But a shortage of parts, especially semiconductors, meant that manufacturers have not been able to keep up with the demand.

“Even though the PV segment saw some launches and slight respite in supply due to better production, it was not enough to meet customer demand. Vehicle waiting period thus remains similar to what it was in the last few months,” Gulati said in a statement.

Customers may have to wait several months, and in some cases up to a year, for popular models of cars.

On the commercial end of the industry, demand for three-wheelers and trucks and buses improved slightly, but on a significantly low base. Compared to the pre-pandemic month of February 2020, demand for commercial vehicles remains significantly low.

“While commercial vehicles are not at similar levels when compared to pre-covid months, slight recovery on yearly basis was visible majorly due to low base effect,” Gulati said. “This coupled with increase in government’s infrastructure spending saw continued traction in HCV and Tipper segments. Fleet operators who were earlier being missed have slowly started purchasing vehicles.”

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