Chip shortage leads to over 18% fall in November vehicle sales

According to data available with the industry body Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales last month fell 18.6% to 215,626 units. Including the sales of Tata Motors, which has stopped reporting monthly data to the SIAM, the industry volume fell about 14%.

sold 29,778 units in November.

These are dispatches from factories to dealers and not sales to customers, as automakers in India do not report monthly retail sales.

Two-wheeler sales dropped a steeper 34% last month. While sales of scooters fell 39% to 306,899 units, those of motorcycles slid 32% to 699,949 units in November.

Two-wheeler sales, especially at the entry-level, have been hit due to a rise in prices after the transition to BS-VI emission standards and the economic impact of the second wave of the pandemic in rural areas.

SIAM director-general Rajesh Menon said: “Industry continues to face headwinds due to a global semiconductor shortage. In the festive season, the industry was hoping to make up for the lost ground, but sales in November 2021 were the lowest in seven years for passenger vehicles, lowest in 11 years for two-wheelers and the lowest in 19 years for three-wheelers.”

Three-wheeler sales last month totalled 22,471 units, a 6.6% drop from a year earlier.

The impact of disruptions in the global supply of semiconductors is clearly visible now as November saw a decline in PV sales, said Saket Mehra, partner and auto sector leader at Grant Thornton Bharat. “Despite the demand shooting up during the festive season, the passenger vehicle sales slipped 18% YoY and 17% MoM,” he said, adding: “As the semiconductor shortage continues to create an imbalance with reduced productions and stretched delivery period, the consumer sentiment is expected to dampen further.”

Chances of restrictions due to the Omicron variant of Covid-19 are likely to keep manufacturers and consumers on a cautious side going ahead, Mehra said.

Meanwhile, domestic sales are now expected to grow with stabilisation in semiconductor supplies and a reduction in fuel prices.