Passenger vehicle sales grew by 28% in March, but Covid concerns remain: FADA

After a forgettable 2020, the Indian auto industry seems to be gradually crawling back to its pre-Covid form. In March this year, the passenger vehicles segment managed to grow by nearly 30 per cent compared to the same period last year when the Covid-19 crisis led to nationwide lockdown.

The Federation of Automobile Dealers Associations (FADA), which represents the automobile dealers in the country, said the passenger vehicle retail sales in March witnessed a year-on-year growth of 28.39 per cent, selling 2,79,745 units of vehicles. In March last year, the passenger vehicles sales stood at 2,17,879 units before the Covid-19 lockdown had almost completely shut down vehicle sales for some time.

Vinkesh Gulati, President of the Federation of Automobile Dealers Associations (FADA), said that total registrations fell by double digits in March as compared with March last year despite the fact that last week of the month was wasted due to the lockdown enforced back then.

"According to Pew Research, financial woes brought by Covid-19 have pushed about 32 million Indians out of the middle class, undoing years of economic gains. This had its impact on two-wheelers as it saw one of its steepest de-growth in the last few months," Gulati said, adding that rising fuel price have also had its impact on sales. Gulati said, "It not only created havoc in entry level customers' minds but also kept them away from visiting showrooms."

Gulati also said, "According to a FADA survey, 47 per cent PV dealers said that they lost more than 20 per cent sales due to supply side constraints."

Despite the healthy growth, the two-wheeler segment witnessed a downfall of more than 35 per cent. Indians bought 11,95,445 two-wheelers in March this year, against 18,46,613 units in March last year. The three-wheeler segment too witness a sharp drop, which was practically the half of what was sold in March 2020. FADA reported that only 38,034 units were sold last month, down from 77,173 units in the same month last year.

Meanwhile, the commercial vehicle segment also witnessed year-on-year de-growth of more than 40 per cent with 67,372 units sold against 1,16,559 units a year ago. However, there was some relief for the industry which witnessed encouraging signs in tractor sales. According to data shared by FADA, tractor sales grew by 29.21 per cent to 69,082 units in March, against 53,463 units in the same month last year.

According to FADA president, several reasons led to the decline in the commercial vehicle segment, including pressure to pay EMIs after moratorium period was over, high BS 6 prices, lack of availability of finance.

FADA president Gulati is hopeful that April would be better due to festivity across the country. However, he also reminded that amid a strong second wave of the virus prevalent now, any further lockdown will peg the industry back by quite a bit. "April comes with festivities like Ugadi, Gudi Padwa, Baisakhi and Poila Boishakh. This coupled with marriage season is generally a high sales period. At this juncture, the second wave of Covid-19 is not only spreading faster but is also trying to destabilise the growth which India has been able to achieve in the last few months," he said.

FADA also reminded that the semiconductor shortage issue will also continue to hamper passenger vehicles segment, including the two wheelers, in coming days.