A bumpy road ahead for auto sector as sales turn sluggish

The automobile sector in India sees partial growth in the first quarter of financial year 2021-22 owing to the upliftment of lockdown and ease in restrictions amid ongoing Covid-19 second wave. As per the latest data released by Society of Indian Automobile Manufacturers (SIAM), the industry registered a growth of 14.69 per cent in total domestic sales to 12,96,807 units during the month of June.

The association, however, concurred that factors such as steep hike in prices of commodities,

shortage of semiconductor and predictions of a possible third wave of the deadly Covid-19 virus. According to the SIAM data, passenger vehicles sales stood at over 2.31 lakh units, up from about 1.05 lakh units in June last year. Within the passenger vehicle segment, car sales grew to 1.21 lakh units from 55,497 units in June 2020, utility sales to about 1 lakh units from 46,201 units last year and sales of vans stood at 9,495 units as against 3,919 units in 2020.

Commenting on the April – June 2021 data, Rajesh Menon, director general, SIAM, said: "In

Quarter-1 last year (FY 20-21), Indian Automobile Industry had very less sales because of the nation-wide lockdown induced by the first wave of the pandemic. This year too, in Quarter-1 (FY 21-22) sales were subdued due to the impact of Covid second wave."

The three-wheeler segment, however, slipped down as the domestic sales declined by 8.77 per cent to 9,397 units in June 2021 from 10,300 units in June 2020. No quadricycles were sold in India in June 2021 or June 2020.

The total vehicle production has increased by 54.73 percent to 16,93,639 units in June 2021 from

10,94,554 units in June 2020, while the total vehicle exports went up by 81.70 per cent to 4,47,319 units in June 2021 from 2,46,190 units in the same month last year. The data reflects, that the Indian automobile industry is largely dependent upon exports for profitability than domestic sales.

According to SIAM, the impact of rise in prices of fuel on the sales of vehicles in India is yet to be estimated. The Director General of SIAM further states that sales of all segments have been lower in past

several years, barring Q1 of FY 20-21.

"Passenger vehicle segment registered sales of 6.46 lakh vehicles in this quarter, which is lowest in past 7 years, barring Q1 of FY 20-21. Sales of 1.06 lakh units for the Commercial Vehicle segment and 24.04 lakh units for the Two-Wheeler segment, were lowest in past 12 years, barring Q1 of FY 20-21. Three-wheeler segment was the worst-hit with sales of just about 24,000 units, which has been lowest in more than two decades, barring Q1 of FY 20-21," he said.