The allocation of funds for the induction of more buses in public transport, increased infrastructure spending, and the building of national highways across the country in the Union Budget FY21-22 will play a pivotal role in reviving the commercial vehicles (CV) segment over a longer period, according to the Federation of Automobile Dealers Association (FADA).

 

Sales 

India’s total auto sales in January 2021 stood at 1.59mn units, down by 9.66pc from 1.76mn units in Jan 2020, driven by the non-availability of vehicles due to scarcity of semiconductors, a fading pent-up demand, and recent price hikes coupled with no festivities and auspicious days during the month, as per Fada.

 

Passenger vehicle (PV) registrations in January fell by 4.46pc to 281,666 units from 294,817 units sold in the same month year prior, while sales of commercial vehicles (CVs) stood at 55,835 units, down by 24.99pc as compared to 74,439 units sold in Jan 2020.

 

The association said that the auto industry misjudged the demand which had returned earlier post lockdown. The auto industry’s estimation of post-COVID-19 rebound, along with chipmakers prioritizing higher-volume and more lucrative consumer electronics market created a vacuum for semiconductors. This resulted in a shortage in supply for all categories of vehicles, especially the PV segment even though inquiry levels and bookings remained high.

 

New launches and SUV sales continued to see high traction and helped in restricting the overall PV registrations fall by a bigger margin.

CV sales were also affected due to vehicle financing not going back to normal and high BS-6 cost, Fada added.

India’s CV sales in January 2021 (in units)
TypeJan-21Jan-20YoY (pc)
Light commercial vehicle34,46448,014-28.22pc
Medium CVs3,4664,038-14.17pc
Heavy CVs14,27919,412-26.44pc
Others3,6262,97521.88pc

Two-wheeler sales in January declined by 8.78pc to 1.16mn units from 1.27mn units in the preceding year due to the recent price hike undertaken by OEMs. The vehicles became more expensive for the lower and middle-income class in January.

 

Tractor sales in January rose by 11.14pc to 60,754 units from 54,662 units sold in Jan 2020, while three-wheeler sales stood at

31,059 units, declining by 51.31pc as compared to 63,785 units during the same month a year before.

 

Outlook

Fada said that the Union Budget focused on making India an ‘Aatmanirbhar Bharat’ and the government finally announced the much-demanded Vehicle Scrappage Policy (voluntary). The final contours of the policy though awaited will decide its attractiveness and popularity, it added.

 

The association said that with a high base and continued shortage of semiconductors on one hand and the gradual opening of academic institutes and business as usual, and the effectiveness of the COVID-19 vaccines on the other, it continues to remain guarded in its optimism for vehicle registrations in the last quarter (Q4) of the current fiscal.

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