Besides, challenges pertaining to high operating and ownership costs due to rising fuel and commodity prices subdued buyers' sentiments.
Sales of passenger vehicles (PV) fell by over 41 per cent to 160,070 units in September, as compared to 272,027 units sold during the corresponding month of 2020.
On a sequential basis, September's PV sales were far lower than the August level of 2,32,224 units.
The data furnished by the Society of Indian Automobile Manufacturers (SIAM) does not include sales figures from some key players such as Tata Motors.
Segment-wise, a total of 64,235 passenger cars were sold in the domestic market in September, down from 163,981 units sold in the like period of 2020.
The sales of other sub-categories such as utility vehicles (UV) and vans also degrew on a year-on-year basis. As per the data, UV sales fell to 87,720 units from 96,633 units, while the off-take of vans declined to 8,115 units from 11,413 units in the year-ago period.
In terms of two-wheelers, sales were lower in September 2021 at 1,528,472 units from 1,849,546 units sold in the like month of 2020.
The overall domestic automobile sectors' off-take representing the sales of passenger vehicles, two-wheelers, three-wheelers and quadricycle fell to 1,717,728 units from 2,140,549 units sold during the same period of last year.
However, the data showed a YoY rise in exports. The overall exports, including PVs, two and three-wheelers and quadricycle rose to 451,266 units from 419,933 units during the same period of last year.
In terms of the second quarter sales, passenger vehicles' off-take inched-up to 741,300 units as compared to 726,232 units sold during the corresponding period of last fiscal.
On the other hand, two-wheeler sales slid to 4,113,915 units from 4,690,565 units sold in Q2FY21.
The overall domestic automobile sectors' off-take fell to 5,092,371 units from 5,597,025 units sold during the same period of last fiscal.
In contrast, the overall exports, including PVs, two and three-wheelers and quadricycle, rose to 1,410,679 units from 998,788 units sold during the same period of FY21.
"Indian automobile industry continues to face new challenges. While on the one hand we are seeing a revival in vehicle demand, on the other, shortage of semi-conductor chips is causing a major concern for the industry," said Kenichi Ayukawa, President, SIAM.
"Many members have curtailed their production plans. Coupled with the festive season demand, this has led to long waiting time for the customers on popular models of some segments. High raw material prices also continue to be a challenge," Ayukawa added.
According to Rajesh Menon, Director General, SIAM: "Owing to the semiconductor shortage, in September 2021 there was a drop in production of about 37.46 per cent for passenger vehicles and 17.15 per cent for two-wheelers.
"On the sales front, barring the Covid period, H1 sales of passenger vehicles are still below 2016-17 levels, that of two-wheelers are below 2011-12 levels, that of commercial vehicles are below 2010-11 levels and that of three-wheelers are still below 2000-01 levels."