Car and two-wheeler sales generally pick up during the festive season. But that hasn't been the case this year. As per the data released by Federation of Automobile Dealers Associations (FADA) for October 2021, overall retail sales (from dealer to customer) stood at 13,64,526 units, including cars and SUVs (passenger vehicles), two-wheelers, three-wheelers, commercial vehicles (CVs) and tractors. This figure is lower by over five percent compared to last year, and a whopping 26 percent down compared to the pre-COVID times of October 2019.
- 2021 festive season sales down as compared to last two years
- Despite decline, car segment faring better than two-wheelers category
- Chip shortage, low demand for entry-level automobiles played spoilsport
A similar trend is observed in the 42-day festival period this year (from October 7 to November 17), which saw total retail of 20,90,893 units across all categories. This number is 18 percent and 21 percent lower than the same period in 2020 and 2019, respectively, which prompted FADA to say, “This was the worst festive season in a decade for auto dealers as semi-conductor shortage in PV segment and low demand for entry-level two-wheeler segment kept the celebrations at bay.”
Notably, while both two-wheeler and passenger vehicle sales have declined this year, between the two, the PV category has managed to fare better.
Source: FADA research
Why are car and two-wheeler sales down?
As per FADA president Vinkesh Gulati, “Semi-conductor shortage, which was already a full blown crises, showed its true colours when, in spite of an above healthy demand, we could not cater to customer’s need as SUV, compact SUV and luxury categories witnessed huge shortage of vehicles. On the other hand, entry-level cars saw subdued demand as customers in this category continued to conserve money due to their families’ healthcare needs.”
Commenting on scooter and bike sales, he added, “The 2W category continues to face the brunt of low sales, with entry-level category being the biggest spoilsport. The rural distress in retails, coupled with frequent price hikes, triple digit fuel prices and customers conserving funds for healthcare emergencies, kept the demand low. In fact, walk-ins and customer inquiries were also ultra-lean during the said period.”
PV segment looks strong, but two-wheeler dealers need support
Not all is doom and gloom, though. Despite the festive season drawing to a close, FADA reports a huge backlog of orders in the PV segment. According to the dealer body, if carmakers are able to realign supply with demand, we can still see a good year-end retail. The average inventory of cars with dealers is about 10-15 days’ worth of stock.
Two-wheeler dealers, on the other hand, have inventory for 40-45 days, on average. As such, FADA requested two-wheeler makers to rationalise inventory. "It also urges to roll out attractive schemes for customers so that demand, especially in the entry-level category, can be revived,” it added.
Uday Singh
Dipan Sur
Glenn Noronha
Viraaj Bhatnagar
