Auto retail sales see strong double-digit increase

Retail sales of automobiles increased in strong double-digits last month, indicating revival in demand across sectors which were hit by the pandemic the past two years.

According to data available with vehicle retailers body Federation of Automobile Dealers Association (FADA) as many as 1,550,855 vehicles were retailed last month, compared to 1,219,657 units in the same period last year. Sales, however, were lower by around 9% when compared with the pre-covid month of June 2019.

Automakers in India report wholesale dispatches from factories and not retail sales to customers. Registration numbers are hence used as a proxy.

Apart from passenger vehicles and tractors which were already above pre-covid level for last few months and grew by 27% and 40%, commercial vehicles for the first time showed a growth of 4% thus indicating recovery slowly creeping in for this segment”, said Vinkesh Gulati, President, FADA.

While three-wheelers narrowed its decline over June 2019 to -6%, it is the two-wheeler segment which still remains the biggest cause of concern and is not picking as per expectation, said he. Two-wheeler sales did increase by a fifth to 1,119,096 units last month, however, retails were down by -16% when compared with June 2019

Gulati explained, “Poor market sentiment especially in rural India, high cost of ownership, inflationary pressure and June generally being a lean month due to rains kept two-wheeler sales at low speed.” Average inventory of two-wheelers now stands at 20-23 days.

In the three-wheeler segment, a strong major towards electric, permit issues and frequent price increase remained the biggest dampeners.

But even as demand remained strong in the passenger vehicle segment, Gulati cautioned the Russia-Ukraine war has increased inflationary pressure the world over. The RBI too has said high inflation is a major cause of concern. In the past few months, prices of almost all essential items have increased, putting pressure on household budgets andr educing disposable incomes.

“Additionally, high fuel prices have had a spill over effect on transportation and made it expensive. This will have a negative effect on entry level passenger vehicles as well as two-wheeler segment which are generally dominated by first time buyers”, said Gulati,

Average inventory for passenger vehicles currently ranges from 15-20 days, as against the norm of 30-45 days. While availability of semi-conductors have become easier, as reflected in wholesale numbers,

waiting period, especially in compact SUV and SUV segment continued to remain high. FADA said new vehicle launches are seeing robust bookings indicating healthy demand.

If rural India stabilises, auto retail is expected to be good in the upcoming festive season.

The data was put together by FADA from the VAHAN platform of the Ministry of Road Transport and Highways (MoRTH). VAHAN captures data from 1,282 out of 1,409 RTOs in the country.

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