Passenger car sales in March declined 4.87 per cent to 271,358 units compared with 285,240 units in the same month last year. Overall automobile retail sales across categories declined 2.87 per cent to 16,19,181 units against 16,66,996 units in the same month last year.

“Passenger vehicles continue to see high demand and long waiting periods as semiconductor availability still remains a challenge, even though supplies slightly improved from the previous month,” FADA president Vinkesh Gulati said.

He said supply chain disruptions and low demand across segments, especially two-wheelers, are expected to impact sales in the current fiscal with the turnaround anticipated only in the next financial year.

According to the Federation of Automobile Dealers Associations (FADA), the on-going Russia-Ukraine war and the China lockdown is expected to hit supplies of critical components, thereby impacting the revival of the domestic auto industry.

Besides, the revival of demand in rural India would have an impact on the overall growth of the industry in the current fiscal. “We expect the situation to remain challenging in the current fiscal with sales volumes expected to grow by a single digit,” Gulati said.

For 2021-22, the total auto industry retail sales grew 7.21 per cent to 1,63,75,799 units compared with 1,52,74,314 units in the 2020-21 fiscal.

“The near-term outlook for the auto industry continues to remain a challenge as the on-going Russia-Ukraine war and China lockdown does not hint towards a smooth path. Crude is on a boil and hence fuel prices have been raised by around Rs 10. This will continue to rise and further hit sentiments,” Gulati said.

The passenger vehicle segment is expected to witness an impact due to the disruption in precious metals and neon gas supplies which originate from the war-hit zone. It will further slow the supply of semiconductors thus making waiting periods longer for the PVs, Gulati said.

"Overall, FADA remains extremely cautious in terms of any recovery in sight until the Russia-Ukraine war and China lockdown comes to an end," he said.

FADA anticipates the auto industry to come out of the woods and reach pre-pandemic highs by FY2024. Rise in raw material costs has made Original Equipment Manufacturers (OEMs) increase the prices of their vehicles, he noted.

While there is no dent in terms of demand in the passenger vehicle (PV) segment, it is definitely going to impact the two-wheeler segment, which is an extremely price-sensitive market, Gulati said.

In the last fiscal, PV retail sales witnessed a jump of 14.16 per cent at 27,26,047 units, as against 23,87,925 units in 2020-21. Two-wheeler retail sales stood at 1,19,73,415 units last fiscal, up 3.81 per cent as compared to 1,15,33,928 units in 2020-21. Commercial vehicle sales saw year-on-year growth of 45 per cent, while three-wheeler sales increased by 50.32 per cent as compared to the 2020-21 fiscal.