New Delhi, 5 April 2022: The Federation of Automobile Dealers Associations (FADA) today released Vehicle Retail Data for March’22 and Financial Year 21-22.

March’22 Retails

Commenting on how March’22 performed, FADA President, Mr. Vinkesh Gulati said, “Indian Auto Industry during March tried its best to be at par YoY but fell short by – 3% and -30% when compared to March’20 (a month which saw BS4 to BS6 transition).

The 2W segment which was already a non-performer due to rural distress, saw further dampening due to rise in vehicle ownership cost coupled with rising fuel cost. I once again urge all 2W OEMs to introduce special schemes to uplift the morale of this segment to boost sales.

The 3W segment was witnessing a shrinkage in market size due to permit issues, educational institutions being closed and work from home phenomenon. With India now completely opening up, the segment is seeing strong double digit growth when compared to YoY. EVs are now contributing 45% + market share in this segment. There is also good demand for load vehicles from captive customers.

PV’s continues to see high demand and long waiting period as semi-conductor availability still remains a challenge even though supplies slightly improved from previous month. The Russia-Ukraine war and China lockdown will further dent supplies and hence press brakes on vehicle availability thus making waiting period more frustrating for customers.

CV’s continues to inch forward even though full recovery from FY’20 perspective is still away. Sentiment for the segment remain positive as Government’s infra push coupled with replacement demand is driving sales.”

Financial Year 21-22 Retails

Commenting on how FY’22 performed, FADA President, Mr. Vinkesh Gulati said, “FY 2022 was the first year of recovery after Covid hit us in 2020-21. The FY didn’t begin on a good note as with the beginning of April, , 2^nd wave of Covid hit us hard. This time, the spread was not only limited to urban markets but had also taken rural India in its grasp. Unlike last year, the lockdown this time around had been imposed by State Governments and not the Central. Many states continued to remain under lockdown even in May and for over 60 days thus impacting lives, economy and auto sales.

Despite total chaos especially in Bharat, India Auto Retails saw a 7% rise YoY. All segments except Tractors closed in positive. While 2W saw the lowest growth (due to rural phenomenon), 3W, PV and CV all saw double digit growths.

The Government’s vaccination drive saved India from the 3^rd wave which saw negligible impact in terms of either lives or auto retails on an overall basis. Overall full recovery is yet to be seen as Auto Retails are down by -25% when compared to FY20 which was largely a pre-covid year and a year of BS-4 to BS-6 transition.”

Near Term Outlook

With impact of covid lockdown during last two April’s (FY20 and FY21), April’22 will see growth, though on low base. This however when compared to a pre-covid year will still be in deep red.

The near term outlook for Indian Auto Industry continues to remain a challenge as the on-going Russia Ukraine war and China lockdown does not hint towards a smooth path. Crude is on a boil and hence fuel prices have been raised by around Rs 10. This will continue to rise and further hit sentiments on lowering the spending. Along with this, increase in raw material costs have made OEMs increase the prices of their vehicles. While no dent in terms of demand has been seen in PV segment, it will definitely have its impact on 2W segment which is an extremely price sensitive market.

On the other hand, with Gudi Padwa, marriage season and re-opening of educational institutions & offices, we will see some pent up demand coming in especially in the 2W segment.

Precious metals and neon gas which comes from the war hit zone will further slow the supply of semi-conductors thus making waiting periods longer for PVs.

Overall, FADA remains extremely cautious in terms of any recovery in sight until Russia Ukraine war and China lockdown comes to an end.

Long Term Outlook

RBI in its recent note has said that the age of abundant liquidity is drawing to a close. Already snarled by supply bottlenecks, persistent high inflation and tightening financial conditions, the global economy is being dragged to the edge of the wall. The longer- term implications are disruptions to global supply chains if physical infrastructure such as pipelines and ports are destroyed.

For India, the recent reverberations of war have, in fact, tilted the balance of risks downwards. The Government’s thrust on capital expenditure in 2022-23 can, however, be the gamechanger this time around by enhancing productive capacity, crowding in private investment and strengthening aggregate demand amidst the conducive financial conditions engendered by the RBI, and improving business and consumer confidence.

Overall, a lot depends on how the Russia Ukraine war unfolds. Also, for India to come out of the woods faster than other economics, we anticipate that there will be no further impact of covid with vaccination being the shield.

Overall, we anticipate that Auto Industry may come out of the woods and reach pre-pandemic highs by FY2024.

Key Findings from our Online Members Survey

• Inventory at the end of March’22
  • Average inventory for Passenger Vehicles ranges from 15 – 20 days
  • Average inventory for Two – Wheelers ranges from 25 – 27 days

• Liquidity
  • Good                   50.3%
  • Neutral               33.7%
  • Bad                      16.1%

• Sentiment
  • Good                 52.3%
  • Neutral               27.6%
  • Bad                      20.1%

Chart showing Vehicle Retail Data

All India Vehicle Retail Data for March’22

Source: FADA Research