Auto retail sales dip by 8% in July; threat of semi-conductor chips shortage looms again

Total vehicle retail sales decline by 8 per cent year-on-year (YoY) in July with three-wheelers and commercial vehicles (CV) the only segments that saw a growth, the data released by the Federation of Automobile Dealers Associations (FADA) on Thursday showed.

The total retail sales in July were at 14,36,927 units against 15,59,106 units during the same month last year.

While the three-wheeler and commercial vehicle retail sales grew 80 per cent and 27 per cent, respectively, two-wheelers, passenger vehicles (PV) and tractors saw a decline in sales by 11 per cent, 5 per cent and 28 per cent, respectively.

As compared with July 2019, the pre-COVID-19 period, total vehicle retails are down 20 per cent. Passenger vehicles and tractors continued to outperform by growing 19 per cent and 7 per cent. All other categories are in the red with two-wheelers, three-wheelers and commercial vehicles falling by 28 per cent, 15 per cent and 4 per cent, respectively.

Among two-wheelers, Hero MotoCorp's market share dropped from 35.47 per cent in July 2021 to 31.73 per cent last month. It sold 3,20,301 units against 4,01,946 units last year in July. However, it continues to lead the two-wheeler market.

"Hero MotoCorp has been impacted due to continuous stress on entry level segment," Vinkesh Gulati, President, FADA, had told CNBC-TV18 last month.

Honda Motorcycle and Scooter India's market share grew marginally from 24.53 per cent in July 2021 to 25.96 per cent. TVS, Suzuki Motorcycle and Yamaha have also marginally increased their market share.

"The 2W retail run witnessed poor demand as Rural India continues to underperform. This coupled with high inflation, erratic monsoon and high cost of ownership continues to keep bottom of the pyramid customers at bay.

The 3W space continued to see demand recovery even though full recovery to pre-Covid levels is still some time away," said FADA, adding that July is generally considered as a lean month before festival season hits in August.

CV retail figures continue to witness good demand as the government’s infrastructure push is helping customers while the PV segment is witnessing a dream run, according to FADA.

However, with the risk of US-China-Taiwan tussle, threat of semi-conductor shortage is once again looming, it added.

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