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FADA Releases February’22 Vehicle Retail Data

In Automobile
March 04, 2022

The Federation of Automobile Dealers Associations (FADA) today released Vehicle Retail Data for February’22.

Commenting on how February’22 performed, FADA President, Vinkesh Gulati said, “Indian Auto Industry during February continues to remain in red as total retails were down by -9.21% YoY and -20.65% when compared to February’20, a regular pre-covid month. The 2-wheeler segment is showing no signs of recovery as Bharat continues to play spoil-sport. With cost of acquisition continuously going north, inquiry level remained weak. As corporates and educational institutions continued operating from home, urban demand also took a hit. Even though the 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 last few months.

While commercial vehicles are not at similar levels when compared to pre-covid months, slight recovery on yearly basis was visible majorly due to low base effect. This coupled with increase in government’s infrastructure spending saw continued traction in HCV and Tipper segments. Fleet operators who were earlier being missed have slowly started purchasing vehicles.”

Near Term Outlook
With omicron passing away without much impact and supplies showing signs of recovery, it looked as if Indian Auto Industry was at the cusp of recovery until Russia invaded Ukraine. This will once again have ripple effects on the global automobile supply chain.
• On YoY basis, total vehicle retail for the month of February’22 decreases by -9.21% and -20.65% when compared to February’20 (a regular pre-covid month).
• On YoY basis, 3W and CV were up by 16.64% and 7.41%. 2W, PV and Tractors fell by -10.67%, -7.84% and -18.87% respectively.
• 2-Wheeler category continuous to face the brunt of rural distress and high cost of ownership.
• While demand for PV continues to remain strong, the segment is still facing the heat of semiconductor shortage thus impacting supplies.
• Infrastructure spending by the Government increases demand for HCV and Tippers.
• The ongoing Russia – Ukraine war brings new set of challenges for Indian Auto Retail as raw materials for semiconductor will disrupt supplies and crude breaching US$ 110 mark will act as a hinderance on customer sentiment.

Russia is one of the largest producers of rare-earth metals especially Palladium, which is an essential metal for semi-conductors. Ukraine on the other hand is one of the biggest producers and exporter of Neon Gas, which is used in the manufacturing of semiconductors. Due the ongoing war, we once again fear the shortage in semi-conductors which will create additional supply side issues for PVs.

With crude breaching US$ 110 mark, the government will not be able to hold prices of petroleum products for long. Post state election results, oil marketing companies will increase fuel prices by at least Rs. 10-15. While this will act as a obstacle for 2-wheeler sales, with educational institutions and offices now fully open and Gudi Padwa round the corner, we may see some increased interest in 2- wheeler as well as the Bus segment (which has witnessed a long dry spell of almost 2 years). Till the time Russia – Ukraine conflict doesn’t come to an end, FADA changes its outlook from ‘neutral’ to ‘negative’.