Car sales drop 27% despite increasing demand in festive season

Despite growing consumer demand in the festive season, car sales declined 27% in the local market last month. Carmakers have attributed this to shortage of semiconductors, which hit production at many manufacturing plants including Maruti Suzuki and Hyundai Motor India.

According to the Society of Indian Automobile Manufacturers (SIAM), 226,353 passenger vehicles were dispatched from factories to dealers in October, compared to 310,694 units in 2020. It said the decline in wholesale volumes in the industry would be lower at 22% if Tata Motors’ numbers are included.

Rajesh Menon, director-general, SIAM, said manufacturers were banking on the festive season to recover from the severe drop in sales they have faced in the early part of the financial year 2021-22.

It should be noted that automakers in India report wholesale dispatches from factories and not retail sales to customers. Wholesale volumes of passenger cars decreased 43% to 103,829 units in the month under consideration, utility vehicles dipped marginally by 2% to 112,112 units. SIAM noted that the demand for two-wheelers continued to remain under pressure with sales last month falling 25% to 1,541,621 units against 2,053,814 units sold a year earlier.

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Reports say sales of scooters declined 21% to 467,161 units, while those of motorcycles dropped 26% to 1,017,874 units. Two-wheeler sales, especially at the entry level, have been hit adversely due to a rise in acquisition costs post the transition to BS-VI emission norms and the economic impact of the second wave of the COVID-19 pandemic in rural areas.