Automobile dispatches decline 23% as supply-side challenges continue: SIAM

Automobile dispatches from factories to dealerships across the country declined 23 per cent in February, as various supply-side challenges, including semiconductor shortage, and rise in vehicle prices due to the implementation of new regulations, continued to impact the demand scenario, industry body SIAM said on Friday.

Wholesale of domestic passenger vehicles, two-wheelers and three-wheelers declined 23 per cent to 1,328,027 units last month, compared with 1,735,909 units in February 2021.

Overall, passenger vehicle dispatches in February 2022 declined six per cent to 262,984 units, compared with 281,380 units in the same month last year.

Passenger cars wholesales stood at 133,572 units last month as compared with 155,128 units in February 2021. However, utility vehicle dispatches increased to 120,122 units as against 114,350 units in the same period last year.

Sales of vans, however, declined to 9,290 units last month, compared with 11,902 units in February 2021.

Similarly, total two-wheeler wholesales declined to 1,037,994 units in February as against 1,426,865 units in the same month last year, a drop of 27 per cent.

Scooter wholesales dipped to 344,137 units in February, against 465,097 units in the same period last month.

Motorcycle sales also declined to 658,009 units last month as against 910,323 units in February 2021.

Similarly, three-wheeler sales declined marginally to 27,039 units last month as compared with 27,656 units in February 2021.

Analysts said the automobile sector dispatches were expected to remain muted across segments in February this year due to weak rural demand, increase in vehicle prices and supply-side challenges.

“The second and third Covid waves and delayed harvest impacted rural demand for two-wheelers this fiscal year. Besides, higher vehicle and fuel prices also affected rural demand this fiscal, unlike the previous one, when rural India was less impacted by the first Covid wave," Crisil Ratings senior director Anuj Sethi said.

“Continuing supply-side challenges like semiconductor shortages, increase in cost due to new regulations, higher commodity prices and higher logistics cost, etc., have impacted overall sales in the auto industry,” Society of Indian Automobile Manufacturers (SIAM) Director General Rajesh Menon said.

The industry is closely watching the possible impact of the ongoing Russia-Ukraine conflict, as global supply chains could come under stress, he added.

Last month, the total production of passenger vehicles, three-wheelers, two-wheelers and quadricycles declined 20 per cent to 1,795,514 units as compared with 2,253,241 units in February 2021.