NEW DELHI: A record rise in petrol prices had a severe impact on two-wheeler sales in February. According to the auto dealer association body Fada, two-wheeler retail sales (registration) fell 16 per cent in February 2021 to 10,91,288 units as against 13,00,364 sold in the same month last year. Other factors that had a negative impact on two-wheeler sales were a second wave of Covid-19 in certain cities and the continued closure of educational institutions.
“Two-wheelers continued to see sluggish demand as the new wave of Covid in certain states kept customers away. Enquiry levels also narrowed as many educational institutions were still reluctant to open. Fuel prices are at historic highs and this has put a dampener on sentiments. This in turn has pressed the brake on sales at the entry-level price-sensitive category,” said FADA President Vinkesh Gulati.
Fada said that fuel consumption which has almost recovered from the lows of the pandemic is once again witnessing headwinds due to historic price hikes. This will have a negative impact on two-wheeler and commercial vehicle sales in near future, it added.
In Delhi, petrol prices stands at Rs 91.17 per litre on Tuesday (March 9) while diesel is available for Rs 81.47. In Mumbai, petrol is retailing at Rs 97.57, while diesel is priced at Rs 88.60. Petrol prices had last month breached the Rs 100-mark in two places in Rajasthan and Madhya Pradesh.
This rise has not only dampened consumer sentiment but also added to the input and logistic cost. Finance minister Nirmala Sitharaman recently said that a reduction in taxes to reduce retail fuel prices should be a joint call of the central and state governments.
Meanwhile, retail passenger vehicle (PV) sales (registration) grew by 11 per cent year-on-year in February 2021 to 2,54,058 units. The growth is achieved over a low base of last year when India started transitioning from BS-4 to BS-6 emission norms. Fada said that this coupled with the global semiconductor outrage kept the waiting period of PVs as high as 8 months. FADA Survey showed that 50 per cent PV dealers lost 20 per cent plus sales due to the non-availability of vehicles.
Total Auto registrations in India, in fact, fell by 13.43 per cent YoY in February.
In its near term outlook, Fada said, “Consumer spending, which is the driving force behind India’s economy and accounting for 60% of the GDP, fell 2.4% showing signs of sluggishness despite the quarter being in the festive season. This also reflects that consumers are still uncertain and worried about their income and cautious about spending.”
“India’s growth engine will only see full recovery depending on the pace of the world’s largest vaccination programme. A rapid increase in new covid cases will thus reduce the pace of recovery and hence impact overall auto demand.”