Passenger vehicle retail sales dip 8% in Feb as chip woes continue: FADA

Domestic passenger vehicle retail sales declined eight per cent in February as the companies continued to suffer production loss due to chip shortage, automobile dealers' body FADA said on Friday.

The passenger vehicle (PV) sales dropped to 2,38,096 units last month, down 7.84 percent from 2,58,337 units in February 2021.

"Even though the passenger vehicle (PV) segment saw some launches and slight respite in supply due to better production, it was not enough to meet customer demand. Vehicle waiting period thus remains similar to what it was in the past few months," FADA President Vinkesh Gulati stated.

The industry body warned that the Russia-Ukraine conflict could further impact the production of semiconductors.

"Russia is one of the largest producers of rare-earth metals, especially Palladium, which is an essential metal for semiconductors. Ukraine, on the other hand, is one of the biggest producer and exporter of neon gas, which is used in the manufacturing of semiconductors.

"Due to the ongoing war, we once again fear the shortage in semiconductors which will create additional supply side issues for PVs," the Federation of Automobile Dealers Associations (FADA) noted.

Two-wheeler sales last month declined 10.67 percent to 9,83,358 units, compared with 11,00,754 units in February 2021.

Gulati said rural distress coupled with a price rise has led to a drop in the sales in the segment.

"The two-wheeler segment is showing no signs of recovery as Bharat continues to play spoil-sport. With the cost of acquisition continuously going north, the inquiry level remained weak. As corporates and educational institutions continued operating from home, urban demand also took a hit," he stated.

Tractor sales stood at 50,304 units last month, down 18.87 percent from 62,004 units in February 2021.

Commercial vehicle sales, however, witnessed a growth of 7.41 per cent last month at 63,797 units, as against 59,395 units in the year-ago month.

The total sales across categories last month declined by 9.21 percent to 13,74,516 units from 15,13,894 units in February 2021.

FADA said that with crude breaching the USD 110 mark, the government will not be able to hold prices of petroleum products for long and that would have a negative impact on two-wheeler sales.

"Until the Russia-Ukraine conflict doesn't come to an end, FADA changes its outlook from 'neutral' to 'negative'," it added.

FADA said it has collected data from 1,391 out of 1,600 RTOs (road transport offices) across the country.