Current festive season worst in a decade amid chip shortage woes: FADA

While festive season is expected to give robust sales to the auto industry, this year is different. The Federation of Automobile Dealers Association (FADA) has termed the current festive season as the worst in a decade in terms of business for the auto dealerships across the country.

The apex body has attributed this subdued demand amid pandemic as well as the global shortage of semiconductor chips which has impacted vehicle dispatches to dealers and thus, the offtake in the passenger vehicle (PV) segment. "Chip shortage is impacting supplies in PV segment, creating a huge shortage of vehicles in SUV, compact - SUV and luxury segment," FADA President Vinkesh Gulati said in a statement.

Gulati noted that the entry-level passenger vehicle segment is still seeing less demand, likely because customers are conserving money for their health care needs. Sales in the entry two-wheeler segment is also still not picking up due to rising fuel prices and rural distress. Further, people are trying to save for healthcare emergencies amid economic uncertainties, and are putting off high-value purchases.

The dealer dispatches figures released by FADA for passenger vehicle segment shows a 22 per cent decline last month when compared to October of 2020. While the figures for passenger cars stood at 3,33,981 units in the year-ago period, it fell to 2,60,162 units last month. Similarly, in the two-wheeler segment, the volume declined 25.6 per cent to 14,77,313 units last month from 19,85,690 units in October of 2020.

The situation has been comparatively better in the commercial vehicles space thanks to the pick-up in demand for intra-state movement of goods. The segment saw a year-on-year increment of 3.21 per cent at 61, 325 units last month as compared to 59,420 units in the year-ago period.

The industry body FADA represents over 15,000 auto dealers that own over 26,500 outlets across the country.