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The challenges for the Indian automotive industry persisted through the course of November with auto retail remaining in the negative. This is despite Diwali and the wedding season falling in the 30 days of last month. The Federation of Automobile Dealers Association (FADA) on Wednesday announced that auto retail was down 2.70% when compared to November of 2020. Overall retail last month, when compared to November of 2019, was down a significant 20%.
As per a press statement issued by FADA, passenger vehicle segment has seen an uptick in demand - powered also by new launches, but supply constraints have had an adverse impact with waiting times climbing significantly. There are concerns that many buyers may not put off their respective decisions to make a purchase.
The two-wheeler segment is better positioned, but only just. While sales in the segment last month were comparable to figures from November of 2020, FADA notes that the overall sentiment across the country remained low. “There are no signs of increase in inquiry levels which is a bigger cause of concern."
FADA puts the blame on several factors, recognizing that most - if not all - continue to put pressure on the automotive industry. From semiconductor shortage putting unprecedented pressures on production cycles to crop loss due to incessant rains in southern states, the going has been tough. “Unless rural India starts showing signs of strength, overall retails will continue to remain weak," says Vinkesh Gulati, FADA President.
There are also very real concerns that Omicron variant of Covid-19 could adversely impact demand for vehicle in coming times. With chances that offices and educational institutes which had either opened or were close to opening may shut down once again could impact demand. FADA also points to rising input costs which have led many OEMs to hike model prices as a move that could blunt demand. And while it is hopeful that at least the problem of chip shortage will sort itself out in the times to come, FADA believes ‘attractive schemes’ could potentially help demand, especially in the two-wheeler segment.