Passenger vehicle dispatches from factories to dealers declined 13 per cent to the lowest level in five years in December last year as the industry continued to face production issues due to semiconductor shortage, auto industry body SIAM said on Friday.
Passenger vehicle dispatches last month stood at 2,19,421 units compared to 2,52,998 units in December 2020.
While acknowledging that the chip shortage situation is not expected to dramatically change in the short term, the industry body expressed hope that things will improve soon.
As per the latest data from the Society of Indian Automobile Manufacturers (SIAM), two-wheeler wholesales also fell 11 per cent to 10,06,062 units in December 2021. In the year-ago period, the same stood at 11,27,917 units.
Motorcycle sales declined 2 per cent to 7,26,587 units in December last year compared to 7,44,237 units in the same period a year ago.
Scooter sales were also down 24 per cent to 246,080 units in December 2021. During the same time last year, it was at 323,757 units.
In the December quarter of the current fiscal, passenger vehicle sales dropped 15 per cent to 761,124 units from 897,908 units in the year-ago period.
During the same time, two-wheeler sales fell 25 per cent to 35,98,299 units compared to 47,82,110 units in the same period a year earlier.
However, commercial vehicle sales saw a marginal increase to 194,712 units in the quarter under review as against 1,93,034 units in December quarter of 2020.
During the 2021 December quarter, vehicle sales across categories declined 22 per cent on a year-on-year basis to 46,36,549 units.
The same was at 59,46,283 units in the year-ago period.
"The sales numbers in the October-December quarter were not as per expectations for most of the industry players.
"In fact, the festival season sales were very weak as compared to the past.
"Soon after the second wave (of COVID) there was an increase in demand. But industry faced challenges in fulfilling this demand due to supply side issues, mainly shortage of semiconductors," SIAM president Kenichi Ayukawa told reporters in a virtual press conference.
Besides, the entry level car segment suffered a dip as prices went up significantly due to an increase in input costs and upcoming strict regulations related to safety and emissions, he noted.
"If we look at the third quarter figures, passenger vehicle sales are the lowest in the last five years while two wheeler sales are the lowest in the last nine years.
"Similarly, commercial vehicle sales are the lowest in the last five years.
"Three-wheeler segment is the worst impacted, with sales lowest in the last 13 years," Ayukawa said.
He added that for the sustainable growth of the industry, there is a need for both demand improvement and easing out of supply chain challenges.
"Members are working hard to ensure safety of people in the value chain to maximise production to meet the demand and minimise impact of supply side challenges.
"We are hoping for things to improve soon," Ayukawa stated.
According to him, the chip shortage situation is gradually improving but is not expected to change dramatically in the short term.
"If supply chain challenges and COVID remain under control, we can expect some growth in volumes in the coming months," Ayukawa stated.
Further, he said that 2021 has been the second consecutive year of dealing with the challenges and disruption caused by COVID.
"The virus is still here and now it is spreading much faster.
"The auto industry members continue to ensure all COVID safety protocols in the supply chain right from the suppliers and factories to OEM manufacturing units and officers to dealers and service workshops to the customer," Ayukawa said.
Noting that the industry has shown strong resilience in these testing times, he said that based on the government guidelines, the industry will do its best to fight the virus and keep the economy moving.
"... the industry will continue to stand with the government to support in whatever manner possible," he added.
SIAM director general Rajesh Menon noted that shortage of semiconductors has led to production cuts over the last few months.
Other challenges include shortage of containers and rapid increase in COVID infections, he added.
Commenting on December 2021 wholesales, Menon said, demand of the passenger vehicle segment was largely affected due to supply constraints while the two-wheeler segment was majorly impacted due to subdued demand.
Sales of buses and three-wheelers continue to be a concern, he noted.
"Barring 2020, the sales of commercial vehicles in the third quarter has been lowest in the last five years and sales of three wheelers, barring 2020, has been the lowest in the last 13 years," Menon said.
On the industry's wishlist for the upcoming Union Budget, Menon said, "We have requested that the cutoff date for a new manufacturing company to start its production be extended from March 2023 to March 2025.
"It will allow such firms to avail tax incentives as COVID led issues have delayed the commencement of operation of production."