Russian-Ukrainian War Hits India’s Automobile Distribution Sector With Semiconductor Crisis

New Delhi, March 4 (KNN) The ongoing war between Russia and Ukraine has brought a new set of challenges for Indian Auto Retail as the shortage of raw materials for semiconductors will disrupt supplies and breaking the $110 crude mark will hamper the customer sentiment, said the Federation of Automobile Dealers Associations (FADA).

The federation released its vehicle retail sales data for February 2022, indicating that industry retail sales continued to decline during the month of February, with total retail sales down -9, 21% year-on-year and -20.65% compared to the pre-covid month, February 2020

On a yearly basis, 3W and CV increased by 16.64% and 7.41%, while 2W, PV and tractors fell by -10.67%, -7.84% and -18.87% respectively.

According to the data, the 2-Wheeler category continues to face the brunt of rural distress and high cost of ownership while demand for PV continues to remain strong, the segment still faces the heat of the shortage of semi- conductors, which has an impact on supplies.

Commenting on the February 22 performance, FADA Chairman Vinkesh Gulati said, “The 2-wheeler segment shows no signs of recovery as Bharat continues to play spoilsport. With an ever-increasing cost of acquisition, the level of demand has remained low. As businesses and educational institutions continued to operate from home, urban demand also took a hit.

“Although commercial vehicles were not at similar levels to pre-covid months, a slight recovery on a year-over-year basis was visible primarily due to a weak base effect. This, coupled with increased spending government infrastructure, has resulted in continued traction in the HCV and Tipper segments. Fleet operators who were short before have slowly started to purchase vehicles,” he added. (KNN Office)