Auto dealers await the festive season with bated breath every year with almost double the average sale volumes across segments during the period. However, in 2021, semi-conductor shortages and subdued demand in the entry-level segments ushered in what was described as the “worst festive season in a decade” for dealers this year.
According to the Federation of Automobile Dealers Associations (FADA) while demand was healthy in SUV, Compact-SUV and luxury categories, dealers couldn’t do brisk businesses owing to shortages of vehicles.
“On the other hand, entry-level cars saw subdued demand as customers in this category continued to conserve money due to their families healthcare needs,” said FADA President, Vinkesh Gulati in a statement released along with vehicle retail data for October 2021 and 42 days festive period.
During October 2021, vehicle sales declined by 5.33% year on year at 1.36 million as compared to 1.44 million vehicles sold in October 2020 and 1.86 million sales during October 2019, as per FADA data.
Two-wheeler sales continue to remain subdued owing to rural distress due to triple-digit petrol prices and reduced spending capacity as consumers preferred to conserve cash for healthcare emergencies in wake of the pandemic.
“The two-wheeler (2W) category continues to face the brunt of low sales with entry-level category being the biggest spoilsport. The rural distress in retails coupled with frequent price hikes, triple-digit fuel prices and customers conserving funds for healthcare emergencies kept the demand low. In fact, walk-in’s and customer inquiries were also ultra-lean during the said period,” said Gulati.
Two-wheeler sales at less than a million vehicles in October 2021 slipped 30% as compared to 1.4 million sales in October 2019.
Both entry-level and medium & heavy commercial vehicles (H&CVs), however, saw robust growth due to lower base and infrastructure projects coming up in different states. Buses as a category is yet to see any revival in demand.
“With normalcy returning in business, the 3W category has started to witness usual demand. This aided with extreme low base of last year, is also helping 3W post a healthy growth. It is noteworthy to mention that we are witnessing a tactical shift from ICE to EV’s as EV share in 3W has now crossed the 45% mark,” added Gulati.
