Stuck in low gear
Premium- While the easing of a crippling chip shortage explains the bounce in passenger vehicle sales, with the pent-up requirement being fulfilled, demand from rural areas and lower-income households is still subdued
Even as our economy emerges from the pandemic, auto sales haven’t yet driven into the fast lane. Data released on Thursday by the Federation of Automobile Dealers Associations shows an 8.3% rise in retail vehicle sales from a year ago. Compared to August 2019, though, sales were down 7.5%. This shows the industry hasn’t yet regained its pre-covid health. This is mostly because of weak two-wheeler and tractor sales, while the offtake of passenger and commercial vehicles fared better. The data suggests persistent divergences in our economic recovery. While the easing of a crippling chip shortage explains the bounce in passenger vehicle sales, with the pent-up requirement being fulfilled, demand from rural areas and lower-income households is still subdued. Encouragingly, the apex dealer association has notched up its outlook to ‘optimistic’ from ‘cautiously optimistic’. Perhaps the upcoming festive season will see a pick-up in sales across all segments. That input prices seem stable, and oil prices have eased should also aid demand. As electric vehicle roll-outs gain momentum, we could witness switchover purchases as well. This sector needs to regain its pre-slump verve soon.
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