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Auto registrations continue to fall in March

New Delhi: The Federation of Automobile Dealers Associations (FADA) on Thursday released Monthly Vehicle Registration Data for March 2021. Commenting on how March 2021 performed, FADA President Vinkesh Gulati said, “Auto Registrations for the month of March witnessed double-digit fall to the tune of -28.64 per cent YoY, in spite of 7 days of lockdown last year.

Tractors and Passenger Vehicles were the only 2 categories that saw healthy double-digit growth. This growth can be associated with multiple factors like the low base of last year, a transition from BS-4 to BS-6 and India going under total lockdown. The global shortage of wafers which is an input for semiconductor continued to linger around and kept the PV waiting period as high as 7 months. According to FADA Survey, 47 per cent of PV dealers said that they lost more than 20 per cent of sales due to supply-side constraints.

Tractors continued its dream run as rural incomes saw improvements after successive monsoons and good rabi produce. If experts are to be believed, India will witness a normal monsoon for the 3rd year in a row. This will further see tractors performing well in FY 21-22.

According to Pew Research, financial woes brought by Covid-19 have pushed about 32 million Indians out of the middle class, undoing years of economic gains. This had its impact on 2-wheelers as it saw one of its steepest de-growth in the last few months. This coupled with high fuel prices and price increase acted as a double whammy. It not only created havoc in entry-level customers mind but also kept them away from visiting showrooms.

The 3-wheeler marketing is witnessing a tactical shift from ICE to EV’s. While prices of vehicles are increasing due to BS-6 and metals prices, customers coming from the lower-income category are not able to re-pay EMI’s due to poor income. This coupled with social distancing norms and educational institutions still closed are keeping riders away.

Commercial vehicles continued to degrow on a YoY basis. High BS-6 prices, low finance availability, repayment pressure due to the moratorium period getting over, were the few reasons for non-performance. The category showed growth in some markets/subcategories where Government Infrastructure spending has begun. Bus segment continued to suffer due to ongoing Pandemic.”

Near Term Outlook

The month of April comes with festivities like Ugadi, Gudi Padwa, Baisakhi and Poila Boishakh. This coupled with marriage season is generally a high sales period. At this juncture, the second wave of Covid is not only spreading faster but is also trying to destabilize the growth which India has been able to achieve in the last few months. Any lockdown at this point will severely hamper the momentum which is getting built for the Auto Industry to come out of the woods.

Increase of Covid and fear amongst consumers with last year’s sight in mind has started keeping them away from making a high ticket purchase. The effects of the same can be seen in the 2-Wheeler category where inquiry levels are low. This coupled with semiconductor shortage will continue to hamper not only Passenger Vehicles but also Two Wheelers as ABS shortage is currently ringing alarm bells.

Since Maharashtra contributes 10-11 per cent of the auto retail, the current Lockdown will have a catastrophic effect on overall sales for the month of April.

Overall, FADA maintains extreme caution for the month of April as Covid rises to newer highs.

Key Findings from survey
Sentiments

43.9 per cent dealers rated it as Good
35.7 per cent dealers rated it as Neutral
20.4 per cent dealers rated it as Bad

Liquidity

45.5per cent dealers rated it as Good
37 per cent dealers rated it as Neutral
17.5 per cent dealers rated it as Bad

Expectation in April

48.7 per cent dealers rated it as Growth
31.7 per cent dealers rated it as Flat
19.6 per cent dealers rated it as De-growth

Inventory

Average inventory for Passenger Vehicles ranges from 10 – 15 days
Average inventory for Two-Wheeler ranges from 30 – 35 days

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