Worst festive season in decade for India's auto industry, says dealers' body FADA

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On the occasion of Dhanteras, MG Motor India delievered 500 units of recently launched MG Astor mid-size SUV. On the other hand, Renault, the French carmaker says they delivered 3,000 units of their vehicles to mark the auspicious day. While these numbers may sound promising, Automobile dealers' body FADA termed the current festive season as the worst in terms of business in a decade for its retail partners across the country.

The auto industry is already going through rough waters due to rising fuel prices and shortage of semiconductors resulting in delays in production across manufacturers in India and globally too. While many were anticipating good sales during the ingoing festive season that started in September 2021, the numbers are not very promising and the multiple factors resulted in dampened growth.

High upfront cost due to recent price hikes, a global shortage of an electronic component -- semiconductors or micro-chips -- causing production issues, which, in turn, elongated the waiting period of popular automobile models and high fuel cost combined with inflationary pressure dampened the sales momentum.

FADA, the industry body, which represents over 15,000 auto dealers that own over 26,500 outlets across the country, said the chip shortage situation has impacted offtake in the passenger vehicle segment. FADA President Vinkesh Gulati said in a statement, "This is the worst festive season that the Indian auto retail has seen in the last decade. Chip shortage is impacting supplies in PV creating a huge shortage of vehicles in SUV, compact - SUV and luxury segment."

He also noted that the 2W entry level sales is still not picking up due to rural distress, fuel prices and people still trying to save for healthcare emergencies rather then making a high value purchase. In terms of CV segment, small commercial vehicles are picking up post unlocking due to demand for intra state movement of goods. On the other hand, in 3W space, a big churn is happening from ICE to EV. 

Not just the demand during Diwali and Dhanteras, major automakers recorded a sharp decline in October 2021 sales. Maruti Suzuki India's October total sales fell over 24 per cent to 138,335 units in October 2021 from 182,448 units sold during the corresponding period of last year. On the other hand, Hyundai Motor India also reported a decline in October cumulative sales. The company's October sales fell by over 36.7 per cent on a year-on-year basis. 

Both these automakers represent 70 percent of total car sales in India. In terms of two-wheeler segment, Hero MotoCorp reported total sales of 5,47,970 units, down from 8,06,848 units sold during the corresponding period of last year. 

With inputs from agencies