The automakers continued to witness weak sales in January 2022 with the overall retails falling 10.7 percent on a YoY basis. The overall vehicle sales are down as much as 18.4 percent from January 2020, a pre-COVID month.
On a YoY basis, while 3-Wheelers and commercial vehicles (CV) witnessed a growth of 30 percent and 20.5 percent, sales of 2-Wheelers, passenger vehicles and tractors saw degrowth of -13 percent, -10 percent and -10 percent, respectively, a report by the Federation of Automobile Dealers Associations (FADA) showed.
Comparing the sales to January 2020, a pre-COVID month, sales of 2-wheelers are down 20.27 percent, 3-wheelers 36.6 percent, passenger vehicles 12.4 percent and commercial vehicles 9.2 percent, the report added. Only tractor sales have witnessed some growth, up 1.3 percent in January 2022 versus January 2020.
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"Auto retails weak performance of -18.4 percent compared to January’20 (a pre-covid month) continues to show that India is yet to recover from the covid effect which gripped the world 2 years ago," the FADA report stated.
Hemal Thakkar, Director, Crisil Research, said, “It's amply clear that passenger vehicle retails are still getting impacted on account of semi-conductor shortages.”
This weakness can also be seen in the stock performance of auto firms.
Reacting to the FADA report, the Nifty Auto shed over 1 percent with most of its constituents in the red, in today's session. 2-wheelers Hero Moto, TVS Motor, Eicher Motor and Bajaj Auto lost the most, between 1.5-3.5 percent each.
In the last 1 year, only 6 constituents of the Nifty Auto index have given positive returns, while the remaining 9 remain in the red. Hero Moto fell over 24 percent, while Bajaj Auto, Eicher Motors and M&M shed between 10-20 percent in this period. However, passenger vehicle firms Tata Motors and Maruti Suzuki were in the green, up 48 percent and 11 percent, respectively.
As per the FADA report, all major 2-wheelers including Hero Moto, Honda, TVS Motor, Bajaj Auto, Royal Enfield witnessed a decline in their sales as well as market share since January 2021. However, a slight increase was seen in the market share of electric 2-wheelers like Hero Electric Vehicles' market share rose to 0.76 percent from 0.14 percent, a year ago. Similarly, other electric vehicles firms like Okinawa Autotech, Piaggio Vehicles, Ola Electric, all witnessed a rise in their market share in the past 1 year.
"2 wheelers still continue to struggle as they post a decline of 13% in retails with a higher offtake decline. This is the third consecutive month of similar trend which also means there is continuous inventory correction happening and retails of 2 wheelers are genuinely slowing down which is a concern,” Thakkar said.
A similar trend was seen in passenger vehicles makers. Maruti Suzuki's market share in passenger vehicles fell from 49 percent to 46 percent in Jan 2022, Hyundai Motors' market share also declined from 17 percent in Jan 21 to 13.6 percent in Jan 22. Tata Motors and M&M also witnessed a decline in their market share in passenger vehicles during this period.
"In spite of good demand, Passenger Vehicle continues to face the brunt of semi-conductor shortage resulting in a void of a healthy inventory. Coming to the 2-wheeler category, the rural distress coupled with price rise and omicron wave played a villain’s role for this segment." the FADA report stated.
It added, "In fact, 55 percent of dealers in our internal survey said that they lost over 10 percent sales due to the Omicron wave."
Going ahead, FADA believes that auto retail will slowly turn around as the economy gets back on its feet post the 3rd wave of COVID. Semi-conductor shortage is also showing some signs of easing as many PV OEMs assure of better dispatch. Thus, it expects vehicle availability to improve going further.
Further, Budget 2022 stressed on developing 25,000 kms of new highways, which will further push infrastructure spending, resulting in an increase in Commercial Vehicle sales, FADA forecasted.
Overall, FADA changed its outlook from ‘negative – neutral’ to ‘neutral’ for the next couple of months.