September Auto Retail Sales: Chip Shortage Spoils Festive Mood

Inventory at automobile dealerships remained tight, hurting supply ahead of the festival season as the global chip shortage continues to hurt production.

Vehicle registrations—a measure of sales at dealerships—fell 6.4% over the preceding month and 4.7% year-on-year to 13.03 lakh units in September, according to data from 1,493 regional transport offices in 33 states and union territories collated from the website of the Ministry of Road Transport and Highways. That’s the second straight monthly decline.

While retail sales of passenger cars and two-wheelers dropped over the previous month in September, commercial vehicle makers witnessed an improvement, led by demand from construction and infrastructure segments.

Factory-gate shipments also declined month-on-month for most automakers in September. Maruti Suzuki India Ltd. cut output to 40% of the normal levels. That has elongated waiting periods on popular models. As the chip shortage that began in December persists, India’s largest carmaker now expects volumes to drop to 60% of the usual levels in October, a month that marks the start of festival season.

Inventory Trends

Barring Tata Motors Ltd., all prominent passenger carmakers tracked by BloombergQuint were running low on inventory—the gap between wholesales and retail sales—at the end of September.

The maker of the Safari and Tiago had in August told BloombergQuint that it was buying supply-chain inventories during the lockdown imposed to curb the second Covid-19 wave. That limited the impact of the chip crisis and helped the company stock dealerships.

While two-wheeler makers were able to push stock in September, demand has suffered as popular variants are unavailable and a series of price hikes and rising fuel prices have increased the cost of ownership.

Commercial vehicles, too, saw an inventory build-up even as demand rose.

State-Wise Snapshot

Bulk of the retail sales in September came from Uttar Pradesh, Maharashtra, Gujarat, Karnataka and Tamil Nadu.

Uttar Pradesh and Tamil Nadu reported two-wheeler sales of more than 1 lakh units each during the month. Demand for commercial vehicles came from Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat and Karnataka.

Here’s how each segment fared in September...

Passenger Cars

Most major passenger carmakers tracked by BloombergQuint witnessed a decline in registrations over the preceding month. Retail sales, however, jumped year-on-year.

Two-Wheelers

Retail sales of major two-wheeler makers tracked by BloombergQuint dropped month-on-month in September but rose over a year earlier.

Commercial Vehicles

Commercial vehicle makers witnessed a revival in demand as economic activity picked up. Retail sales in the segment increased over the preceding month. Year-on-year, too, all major truckmakers, barring Eicher Motors Ltd., reported a rise.