The swift recovery in the personal vehicle segment in FY-21 was a singular event that did not translate to the other automotive segments, indicating that the worst is not over yet for an industry that is still reeling under the hard impact of Covid-19. As the two important segments of the automobile industry – two-wheeler and commercial vehicle segments failed to keep pace with the passenger vehicle segment, the overall automotive market that accounts for 8% of the GDP is now closer to its FY-15 level. The overall sales (cars+two wheelers+commercial vehicles and three wheelers) for 2020-21 are pegged at 18.8 million units even lower than the 19.7 million units reported in FY-15.At the peak, India had seen sales of about 26 million vehicles in FY19. This had enabled the union government to collect tax of approximately Rs 1-1.2 lakh crore. Experts estimate this to drop to about 27% in the fiscal year gone by. The impact of lower volume sales in FY 20-21 on tax will be cushioned somehow due to the rising average realization per units. Thus the fall in the total revenue collected for the union government is expected to be less severe due to the implementation of new emission norms which pushed up prices by 5-15% across vehicle segments.The sales of commercial vehicles and three-wheelers are at a decadal low, as the economy came to a standstill in the Q1 of FY-21. The passenger vehicle sales for FY-21 is estimated at 2.71 million, a level seen in FY-15, knocking off almost half a million units from its peak and the two-wheeler sales are estimated at 15.1 million almost 5-7 million units less from its peak.With sales contracting for the second year in a row, Indian automakers have witnessed one of the longest protracted slowdown in three decades. The slowdown in FY20 was triggered by the rising cost of ownership and covid led disruption in FY21.Shashank Srivastava, ED, sales and marketing at Maruti Suzuki attributed the quick bounce back and the recovery in retails to the resilience of the industry, but added: “… we must view the volumes in the perspective that we are still almost 20% in the negative territory when compared to the high sales of 2018-19. So while we can celebrate the better than expected recovery and be optimistic about the future, we still have a long way to normalcy.”In the passenger vehicle space, the shared mobility space, which accounted for 8% of the overall market, has shrunk to 3% and is struggling. The share of replacement car purchase too has come down significantly while the share of first-time car buyers has moved up due to the need for personal mobility.In the two-wheeler space, the work from home for the IT and service sector and online studies for college students has taken away a significant chunk of buyers from the market. While the motorcycle sales were cushioned by strong rural recovery, the stress amongst the salaried class in urban areas took a toll on the scooter segment. The scooter sales were down 27% vs 16% in the bike segment.In the personal mobility segment, the post corona recovery has created a major divergence in the growth of passenger cars and two-wheelers, where growth has moderated compared with passenger cars. The two-wheeler industry is estimated to contract mid-teen rate in FY21, after having declined by 18% in the FY20. The cumulative volume of the two-wheelers in FY21 is around 15 million, the lowest since FY14 and 30% lower than peak volume in FY19. The 10-year CAGR growth of two-wheelers slipped to 2.35% compared with the average growth between FY15-19.Rakesh Sharma, COO at Bajaj Auto says while the market declined in FY 2021, given the severity and the global scale of the epidemic, amid the transition to BS-VI, the industry‘s performance was actually much better than expected – led by a resilient supply chain. Looking ahead in the immediate term Covid related issues will continue to prevail but with the past experience, it is perhaps more manageable now.“The underlying economic recovery particularly experienced by the lower-income groups is still weak and there are headwinds of cost increases too. Hence while we may not face big disruption and the recovery mode will continue but it promises to be a difficult year to navigate,” Sharma added.At 2.7 million units the car market declined 4% which has consequently pulled the 10-year compounded annual growth rate for the passenger vehicle to just 1% in FY21 compared with 9% between FY15-19.The degree of compression was however arrested by the sharp ‘V’ shaped recovery in the second half of the last fiscal year for the car segment.The shift to personal mobility due to covid and low interest rate has resulted in a sharp recovery for the PV industry and its monthly volume has been growing for the last eight months with an average growth of 31%.Ashish Modani, Vice President, ICRA says the Indian automobile industry was already grappling with demand pressure due to a slowdown in economic activity in FY2020 and Covid-19 induced lockdown further dented demand during Q1FY2021. However, favourable monsoon, bumper crop output and government stimulus (like MGNREGA) provided much-needed support to rural income which turned out to be a growth driver for the domestic automobile industry.“Rural focused segments like tractors, motorcycles, entry-level cars and compact UVs have done reasonably well despite washed out Q1Fy2021. On account of a low base, we expect cars and two-wheeler segments to come back to strong double-digit growth, while the car segments may attain its previous peak in FY-22, two-wheelers may happen a year later in FY-23” added Modani.