IGI Logo

Ratings agency ICRA in its latest survey has revealed that demand for two-wheelers continues to be weak while that for passenger and commercial vehicles remains robust as compared with last year. Automobile dealership industry has been witnessing several headwinds in the recent past, including subdued demand for two-wheelers (2W), supply constraints impacting growth of passenger vehicle (PV) sales, and high base effect limiting the growth in tractors segment.

ICRA said extended work and education-from-home has impacted scooters demand, whereas undistributed rainfall affected demand for rural-centric motorcycles. However, it said retail demand for passenger vehicles remains healthy and the demand for commercial vehicles has also been improving after two years of downturn. It noted that the automobile industry has been grappling with supply constraints as semiconductor shortage has impacted vehicle production. 

It further said owing to the supply side constraints, PV segment was the most affected as demand exceeded the supply. However, semiconductor availability has been improving on a sequential basis over the past few months. Supply constraints have resulted in increased waiting periods and lower inventory levels at the dealerships.