Dwindling spare part supplies from China due to virus outbreak impacted production of auto makers
Manufacturers typically witness subdued sales in January and February after robust sales in December aided by heavy year-end discounts
Retail sales of passenger vehicles fell 1.17% year-on-year in February to 226,271 units, said the Federation of Automobile Dealers Associations (Fada) on Thursday, reflecting persistent unease in consumer sentiment and sluggish economic growth.
Manufacturers typically witness subdued sales in January and February after robust sales in December aided by heavy year-end discounts.
However, showroom sales of two-wheelers and commercial vehicles during the period increased due to heavy discounts on offer and marginal recovery in demand in rural areas. The industry witnessed a decline in showroom sales of passenger vehicles for three months in a row, after a marginal recovery in October and November when automakers offered record discounts to woo customers during the festive season.
Most manufacturers witnessed a decline in wholesales during the month as production was cut to control the inventory of BS-IV emission norm-compliant vehicles. In addition, dwindling spare part supplies from China due to the Novel Coronavirus outbreak impacted production of some automakers.
Two-wheeler manufacturers Hero MotoCorp and TVS Motor Co. have already announced a 10% reduction in production in February due to short supplies of components.
Data released by Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Mahindra and Mahindra Ltd and Tata Motors Ltd showed total sales of 197,080 vehicles last month, a 12% drop from 224,241 units sold a year earlier.
According to Ashish Harsharaj Kale, president, Fada, despite reporting growth over the corresponding period, the overall retail sales were below expectations as the anticipated pre-buying for the BS-IV stocks was not seen. Many customers held back on purchases expecting lucrative deals towards end of March.
“February turned positive for retail sales for most of the segments as the entire auto ecosystem, especially the dealers have been focused on liquidation of their BS-IV stocks. With regards to inventory of passenger and commercial vehicles, stocks are at a reasonable level, but the challenge remains in liquidation of non-popular models as dealers look for adequate support for sales of such vehicles in March," added Kale.