Prospective car buyers talk with a sales manager at a car showroom in Mumbai. Photo: AFP

India’s passenger vehicle sales continue to be hampered by chip shortages and low demand for two-wheelers. According to the Federation of Automobile Dealers Associations, passenger vehicle retail sales in March declined by 4.87% to 2,71,358 units, against 2,85,240 units in the same month last year.

Association president Vinkesh Gulati said: “Passenger vehicles continue to see high demand and long waiting periods as semiconductor availability still remains a challenge, even though supplies slightly improved from the previous month.”

He added that the Russia-Ukraine war and the China lockdown will further dent supplies. Apart from chips, there is a disruption in the supply of precious metals and neon gas, which originate from the war-hit zone.

Two-wheeler sales declined by 4.02% to 11,57,681 units in March, compared with 12,06,191 units in the year-ago period. Gulati said the two-wheeler segment had been performing poorly due to rural distress and rising fuel costs had further dampened sentiment.

On the other hand, commercial vehicles and three-wheeler sales registered double-digit growth during the month on the back of the post-Covid economic recovery.

Commercial vehicle sales for March were up 14.91% to 77,938 units, compared with 67,828 units in March last year. Three-wheeler sales were also up 26.61% to 48,284 units last month, compared with 38,135 units in March 2021.

For the fiscal year ended 2021-22, total auto industry retail sales grew by 7.21% to 1,63,75,799 units, compared with 1,52,74,314 units in the 2020-21 fiscal year. Passenger vehicle sales saw a jump of 14.16% at 27,26,047 units, against 23,87,925 units in 2020-21. Two-wheeler retail sales stood at 1,19,73,415 units last fiscal year, up 3.81% compared with 1,15,33,928 units in 2020-21.

Commercial vehicle sales saw year-on-year growth of 45%, while three-wheeler sales increased by 50.32% compared with 2020-21. Gulati, however, pointed out the increase in volumes across sectors in the 2021-22 fiscal year was mainly due to a low base of the Covid-hit 2020-21 financial year.

The government imposed a strict countrywide lockdown in April and May, and automobile showrooms remained closed during these two months. The pandemic-induced economic slowdown had made people cut down on discretionary purchases such as buying a two-wheeler or a car.

He expressed concern over the rise in global crude prices and the intermittent increase in gasoline and diesel prices in India. He felt this would further dampen sentiment. The federation anticipates the auto industry to come out of the woods and reach pre-pandemic highs by the next financial year, Gulati said.