Tech rich cars hit by semi conductor shortage; worst festive sales in decade: FADA

The rich and the well off in India want their tech-savvy cars, but there’s a huge slump in supply because of the paucity of semi conductors. Those at the lower income bracket, who are keen to buy cars, feel they rather hold on to their limited funds and use it for healthcare. All this has led to a fall in vehicle sales in the country in October 2021. The 42 days of the festive season has been the worst in a decade, says Vinkesh Gulati, President, Federation of Automobile Dealers Associations (FADA).

All India Vehicle Retail Data for October’21

Source: FADA Research

42 Days Festival Period

Source: FADA Research

Disclaimer:

The above numbers do not have figures from AP, MP, LD &TSas they are not yet on Vahan 4.

Vehicle Retail Data has been collated as on 08.11.21& 18.11.21 in collaboration with Ministry of Road Transport & Highways, Government of Indiaand has been gathered from 1,357 out of 1,570 RTOs.

“We have witnessed the worst festive season in last decade. 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,” states Gulati in a press statement.

 He further adds that the two wheeler 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-in’s and customer inquiries were also ultra-lean during the said period.

In Commercial Vehicle segment, while entry level and small commercial vehicles have already grown post unlocking and due to intra city goods movement, medium and heavy commercial vehicles are now showing strength due to low base and infrastructure projects coming up in different states. Buses as a category are yet to see any revival in demand.

“With normalcy returning in business, the 3W category has started to witness usual demand. This aided with extreme low base of last year, is also helping 3W post a healthy growth. It is noteworthy to mention that we are witnessing a tactical shift from ICE to EV’s as EV share in 3W has now crossed the 45% mark,” he adds.

Near Term Outlook

Even though the festive period is now over, there is still a huge backlog of order in the PV segment. If PV OEMs are able to realign supply with demand, we can still see a good year-end retail, says FADA.

FADA requests 2W OEMs 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.

Inventory at the end of October’21

O Average inventory for Passenger Vehicles ranges from 10-15days

O Average inventory for Two – Wheelers ranges from 40-45 days

OEM wise Market Share Data for the Month of October’21 with YoY comparison