Automobile sales in India register double digit growth last month
Vehicle registrations with regional transport offices (RTO) rose 37% to 1,627,975 units in April, as per data collated by vehicle retailers’ body Federation of Automobile Dealers’ Association (FADA). However, vehicle retails are yet to retain levels seen in pre-covid month of April 2019. Automakers in India do not disclose retail sales numbers and hence registration numbers are used as a proxy.
FADA President Vinkesh Gulati informed while registrations went up across categories last month, April 2021 and April 2020 sales were low on account of disruptions caused by the first and the second wave of the pandemic. “A better comparison will be with April’19 which was a normal pre-covid month. April’22 when compared with April’19 reveals that we are still not out of the woods as overall retails were down by -6%”, said he.
Retail sales of passenger vehicles and tractors grew by 12% (to 264,342 units) and 30% (to 48,319 units) when compared to April 2019. Registrations of two-wheelers, three-wheelers and commercial vehicles are yet to turn green as these categories were down by -11% (to 11,94,520 units), -13% (to 42,396 units) and -0.5% (to 78,398 units), respectively.
The data was put together by FADA from the VAHAN platform of the Ministry of Road Transport and Highways (MoRTH). VAHAN captures data from 1,429 out of 1,613 RTOs in the country.
Gulati explained, “The two-wheeler segment which has witnessed slight increase in sales when compared to last month is extremely sensitive to price hikes and continues to remain below pre-covid levels. It is a clear sign that Bharat has not been keeping up with India. Apart from rural distress, multiple price hikes coupled with high fuel prices are keeping price sensitive entry level two-wheeler customers away.”
Acquisition cost of two-wheelers has gone up by more than 20% in the past couple of years post the transition to BSVI emission norms, denting demand especially at the lower end of the market.
Even as demand remained strong in the passenger vehicle segment, Gulati cautioned with the Russia-Ukraine war and covid-induced lockdowns in China, the global auto industry continues to witness supply crunch. Headwinds remain from the global shortage of semi-conductor. coupled with high metal prices and container shortages. Customers in the passenger vehicle segment will continue to to witness long waiting periods.
The commercial vehicle segment, which saw a long downturn since the announcement of axle load norms in 2018, is now witnessing demand recovery as all sub-categories continue to inch north, said Gulati, with the government’s push for infra spending further supporting sales.
Near-term, Gulati said challenges will persist for stakeholders in the local automobile industry. The RBI Wednesday hiked repo rate by 40 basis points to conain inflation, which the industry fears will results in an increase in interest rates and impact demand. “The move will curb excess liquidity in the system and will make auto loans expensive. While PV segment may be able to absorb this shock due to long waiting periods, two-wheeler segment is already reeling due to underperforming rural market, vehicle price hikes and high fuel costs…Certainly, this move will slow the speed of auto retail and dampen the sentiments further”, said Gulati.
On the positive side, there has been a revival in private consumption and discretionary spends. Monsoons too are expected to be normal this year, and if evenly distributed it will have a positive rub-off on rural sentiments benefitting tractor and two-wheeler sales. This along with the marriage season in coming days is expected to give a fillip to auto retail.
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