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Cars, SUVs are causing retail auto sales to decline

Tractors retain traction even in March.

Passenger car retail sales continued to grow in March, with more than 2.79 lakh units sold, data from the Federation of Automobile Dealers Associations (FADA) showed. The number wasn’t exactly comparable to the same period last year when sales were halted by the nationwide COVID-19 lockdown.

Regardless of the lower base, total vehicle sales decreased 28.6% to approximately 16.49 lakh units. Two-wheeler sales fell by more than a third to around 11.95 lakh units, while three-wheeler deliveries halved to 38,034 units. Commercial vehicle retail sales fell 42% year over year to 67,372 units in March.

However, tractor sales continued to grow, increasing 29.2% to 69,082 units.

‘Extreme caution’

FADA said it took extreme caution in April in view of the second wave of the pandemic, possible blockages and bottlenecks in semiconductors and ABS (anti-lock braking system).

“Tractors and passenger vehicles (PV) were the only two categories that saw healthy double-digit growth,” said FADA President Vinkesh Gulati. “This growth can be related to several factors like last year’s low base, transition from BS-4 to BS-6 and India which is completely banned,” he added.

He added that the global shortage of wafers, an input for semiconductors, has kept the PV latency to seven months.

Quoting Pew Research, he said the financial troubles from COVID-19 had displaced about 32 million middle-class Indians. This had hit the two-wheeler segment hard, which had seen the steepest growth in recent months. “This, coupled with high fuel prices and price increases, was a double blow,” said Gulati. “Not only did this devastate entry-level customers, but it also kept them from visiting showrooms,” he added.

FADA noted that April was usually a high sales period rather than just a wedding season due to festivals like Ugadi, Gudi Padwa, Baisakhi and Poila Boishakh. A lockdown at this point would severely affect the dynamism of the auto industry, she warned.

“The rise in COVID-19 and consumer anxiety have started to deter them from making high ticket purchases,” the industry group said. “This, coupled with the shortage of semiconductors, will continue to hamper not only PV but also two-wheelers as the ABS shortage is currently ringing alarm bells,” he added.

The industry association said that since Maharashtra accounted for 10 to 11% of the auto trade, the current lockdown would have a “catastrophic effect” on sales this month.

“FADA is extremely cautious for the month of April as COVID-19 climbs to newer highs,” it said.

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