Retail vehicle sales fall 10% on chip shortage, fading demand

Total retail sales of vehicles slid by almost 10% in January to about 15.9 lakh units as a shortage of semiconductors impacted vehicle availability, while fading pent-up demand and price increases by automobile manufacturers also contributed to the decline, according to the Federation Of Automobile Dealers Associations (FADA).

As per data from FADA, passenger vehicle sales fell 4.46% to 2.81 lakh units, sales of two-wheelers declined close to 9% to 11.63 lakh, three-wheeler sales slumped 51% to 31,059 and commercial vehicle sales slipped 25% to 55,835 units. Retail tractor sales, however, continued to post growth, rising 11.1% to 60,754 units.

“After witnessing one-off growth in December, January auto registrations fell once again by 10% year-on-year,” said FADA president Vinkesh Gulati. “Auto industry clearly misjudged the demand which returned post lockdown.”

He added chipmakers prioritising higher-volume and more lucrative consumer electronics over the auto industry had resulted in supply shortages, especially for passenger vehicles, though enquiry levels and bookings remained high. On the outlook for the current quarter, he pointed to the high base from a year earlier. The transition to BS-VI during Q4 of FY20 had resulted in ‘huge’ discounts leading to higher sales and registrations.

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