Rapid revival helps cushion the fall in car sales in FY21

Sales of cars, utility vehicles and vans in India declined around 2% last fiscal, with the impact of nationwide shutdowns offset by a quick demand revival through the various phases of unlocking. A low volume base for FY20, in an industry at the cusp of multiple transitions, also helped cushion the extent of volume shrinkage.

Data with the Society of Indian Automobile Manufacturers (SIAM) showed passenger vehicle sales in the domestic market declined 2.24% to 2,711,457 units. Sales of commercial vehicles fell more than a fifth to 568,559 units. Meanwhile, two-wheeler sales fell 13% to 15,119,387 units in FY21. And those of three-wheelers declined by 66% to 216,197 units in the same period.

Automakers in India report wholesale dispatches from factories and not retail sales to consumers.

“On the sales front, a deep structural slowdown in the industry even before the pandemic, combined with the impact of Covid-19 in 2020-21, has pushed all vehicle segments back by many years. Recovery from here will require time and efforts, by all stakeholders”, said SIAM president Kenichi Ayukawa.

Ayukawa added there is uncertainty in the value chain owing to global shortage in supply of semiconductors, the fresh spate of lockdowns in the country and rising prices of raw materials. “In an environment of uncertainty, instead of trying to predict the future, we will work hard to create it,” Ayukawa added.

A detailed research conducted by SIAM shows that due to deep structural issues, the compounded annual growth rate in the Indian automobile industry has fallen to 1.8% between FY11-FY21 from 12.8% between FY01-FY11. In the past five years alone, CAGR in the industry fell to -1.9% (between FY16-FY21), from 5.7% registered between FY11-FY16.