New Delhi, Jan 5 (IANS): Covid-led restrictions in several states and people starting working from home are expected to have a negative effect on retail automobile sales, the Federation of Automobile Dealers Association said on Wednesday.

"Various state governments have once again announced Covid restrictions. Work and education from home have resumed and will have a negative effect for auto retail. With the fear of health care expenses rising again, the customers are shying away from closing their purchase decisions," the association said in a statement.

Besides, it said that the association will remain cautious over the next two-to-three months.

Reacting on the fall in YoY automobile sales in December, the association said: "The month of December is usually seen as a high sales month where original equipment manufacturers continue to offer best discounts to clear the inventory due to change of year.

"It was however not the case this time around as retail sales continued to disappoint thus wrapping up an underperforming calendar year."

The decline in sales in December is also attributed to the shortage of semiconductor.

In December, total retail automobile sales in India fell 16.1 per cent to around 1.6 million units.

Commercial vehicles segment, however, performed relatively well in December. The sales increased 13.7 per cent YoY to 58,847 units, the association said.

"The government's push for infrastructure spending especially road infrastructure, better freight rates, price hike announcement in January and a low base helped the overall segment close in positive double digits," it added.