Third Covid wave, microchip shortage dented auto sector's Jan sales: Experts

The third Covid wave along with microchip shortage leading to lower production and elongated waiting periods dented January 2022 sales of key automobile players.

"On account of Covid-19, sluggish rural sentiments due to crop loss because of untimely rains impacted realisations the sales of 2 wheelers and tractors which have been under pressure and both these segments are still saddled with higher inventory on the dealer front leading to sluggishness in offtake for these segments. In case of premium motorcycles demand is reasonable but chip shortage is limiting growth," said Hemal Thakkar, Director, Crisil Research.

According to Thakkar, with respect to passenger vehicles, demand continues to be strong, especially in the premium compact, compact SUV and SUV segment and waiting periods continue to move northwards.

"Chip shortage is something that has impacted this segment substantially and we expect the pain to continue for some more time. We see some easing from July 2022 onwards; however globally increasing penetration of EVs will keep chip shortages under check," Thakkar said.

Rohan Kanwar Gupta, Vice President & Sector Head - Corporate Ratings, ICRA, said: "January 2022 saw the two-wheeler industry post a 14 per cent sequential growth in domestic wholesale volumes. However, the sales were 21 per cent lower on a YoY basis, highlighting the adverse impact of price hikes, fuel inflation, and omicron related concerns on consumer sentiments."

"The supply chain issues in production of premium motorcycles also persisted. The reinstatement of localised restrictions, to contain the third wave of pandemic, constrained retail sales and led to a 11 per cent sequential fall in volumes, to 10.2 lakh units," he added.

Auto major Maruti Suzuki India sold a total of 154,379 units in January 2022 which was lower than the off-take of 160,752 units reported in January 2021.

Similarly, Hyundai Motor India reported lower cumulative sales on YoY basis. Its January 2022 sales stood at 53,427 units, down from January 2021 off-take of 60,105 units.

In terms of two-wheeler sales, Hero MotoCorp sold a total of 380,476 units of motorcycles and scooters in January 2022, lower than 4,85,889 units off-take during the corresponding month of 2021.

Honda Motorcycle and Scooter India reported total sales of 354,209 units in January 2022, down from 437,183 units sold during January 2021.