Passenger vehicle sales remain subdued in February due to supply constraints

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Passenger vehicle sales continued to remain subdued last month with supply constraints of semi-conductors disrupting production across automakers in February.

Industry numbers were dragged down by market leaders Maruti Suzuki and Hyundai Motor India, where volumes slid by 7.5% (to 133,948 units) and 14.6% (to 44,050 units), respectively.

Maruti Suzuki Managing Director Kenichi Ayukawa last week had said while demand in the domestic market looks “promising” and the company has “healthy” bookings, limitations in supply are expected to persist for some more time.

“The shortage of electronic components had a minor impact on the production of vehicles which are primarily sold in domestic market. The company took all possible measures to minimise the impact”, Maruti Suzuki said in a statement Monday.

South Korean auto major Hyundai too said even as the industry continues to grapple with semiconductor shortage situation, Hyundai along with its partners is “continuously exploring alternatives to ensure customers can take delivery of their most loved Hyundai cars at the earliest”.

Homegrown auto majors Tata Motors and Mahindra & Mahindra (M&M) bucked the trend to report an increase in volumes last month. While sales at Tata Motors rose 47% to 39,981 units, those at Mahindra went up 80% to 27,663 units.

“All segments showed robust growth including SUVs at 79%, which registered the highest ever monthly volume. We expect demand to continue to remain strong as the Covid situation eases further”, said Veejay Nakra, chief executive officer (automotive division), M&M, adding, the company is closely monitoring the semi-conductor related parts supply and taking corrective action as appropriate.

Kia India – which recently launched multi-purpose vehicle Carens – too saw volumes go up by 8.5% to 18,121 units in February.

Japanese auto major Honda Cars India and Toyota Kirloskar Motor (TKM) both saw a decline in sales due to inadequate availability of semi-conductors. Yuichi Murata, director (marketing and sales), Honda Cars India said, while the company is witnessing an improvement in consumer sentiment with the COVID-situation tapering off, chip shortage continued to impact production and despatches in Feb’22. “We hope the situation improves in future so that we can meet the market demand more effectively”, said Murata.

Honda Cars India sold 7,187 vehicles last month, which is a decline of 23% compared to 9,324 units sold in the year-ago period. Meanwhile, sales dipped 38% to 8,745 units at TKM.

Demand for commercial vehicles grew moderately last month with market leader Tata Motors registering a growth of 9% to sell 33,894 units in February. Rival Ashok Leyland too saw volumes rise 4% to 13,281 units last month.

Two-wheeler sales remained under pressure with the country’s largest manufacturer Hero MotoCorp reporting a 32% decline in domestic sales at 331,462 units. “With a sharp decline in the number of Covid-19 cases and the economy gradually opening up with several other positive indicators, such as easing of the lockdown restrictions, as well as the measures announced in the FY’23 Union Budget, a swift revival in sales is expected in the coming months”, Hero MotoCorp said in a statement.

Ditto, Honda Motorcycle & Scooter India (HMSI) where sales fell 31% to 285,677 units. Royal Enfield sold 52,135 units last month – decline of 20% compared to 65,114 units sold in February 2021.

In the farm equipment sector, Mahindra Tractors reported a 30% decline in sales at 18,910 units in February. However, Hemant Sikka, president (farm equipment sector), Mahindra & Mahindra, is optimistic of demand picking up going ahead. “Agri indicators continue to be promising with Rabi sowing at an all-time high and higher liquidity with farmers on account of timely and record procurement of Kharif crops. With record expansion in sown area for third consecutive Rabi season, we are optimistic for an all-time high crop production level. Additionally, government’s focus on increasing cropping intensity of summer crops will bring in additional income in the hands of the farmers,” he said.

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