stuck in low gear

Even as our economy emerges from the pandemic, auto sales have yet to move into the fast lane. Data released by the Federation of Automobile Dealers Associations on Thursday showed sales of retail vehicles increased by 8.3% compared to a year ago. Compared to August 2019, however, sales were down 7.5%. This shows that the industry has not yet regained its pre-Covid health. This was mainly due to weak two-wheeler and tractor sales, while offtake of passenger and commercial vehicles was better. The data suggests a persistent divergence in our economic recovery. Reducing the chip shortage explains the boom in sales of passenger vehicles, but even with the demands met, demand is still low in rural areas and low-income households. Encouragingly, the apex dealer association has raised its outlook from ‘cautiously optimistic’ to ‘optimistic’. Perhaps in the coming festive season, sales will pick up in all segments. Input prices are looking stable, and oil prices have come down, this should also help demand. As electric vehicle roll-out gains momentum, we may also see switchover purchases. The sector needs to regain its pre-recession position soon.