Retail auto sales for July fall by 8% to 14.7 lakh units: FADA

According to data available with the Federation of Automobile Dealers’ Association (FADA), 1,436,927 vehicles across segments were retailed in July, a decline of 7.84% from a year earlier. Sales were, in fact, 19.92% lower when compared with the pre-Covid month of July 2019.

The federation has compiled the numbers from the vehicle registration data available on the Vahan dashboard of the Ministry of Road Transport and Highways. Though the numbers are incomplete as some regional transport offices are still not linked to the Vahan portal, these are seen as a good proxy for the trend in the automobile retail market, as manufacturers only disclose their dispatches from factories.

Retail sales of three-wheelers and commercial vehicles increased by 80.41% to 50,349 units and 27.32% to 66,459 units, respectively.

Retail sales of commercial vehicles remained strong last month with government spending on infrastructure helping customers in concluding their purchase. The bus segment has also started witnessing recovery, as educational institutions and offices are once again back to the normal mode, the FADA said in a statement. Three-wheelers continued to see an upswing in demand driven by e-rickshaws due to increased movement of passengers. Full recovery to pre-Covid levels, though is still some time away.

New registrations captured on the Vahan dashboard fell in two-wheeler (by 10.92% to 1,009,574 units), passenger vehicle (by 4.66% to 250,972) and tractor (by 27.72% to 59,573) segments in the past month.

“The two-wheeler retail run witnessed poor demand as rural India continues to underperform. This, coupled with high inflation, erratic monsoon and high cost of ownership, continues to keep bottom of the pyramid customers at bay,” said FADA president Vinkesh Gulati. Average inventory of two-wheelers in the channel currently is 20-23 days.

In the passenger vehicle segment, even though retail sales slipped by about 5% last month, volumes were higher than 2019. Automakers had dispatched a record number of passenger vehicles, estimated to be about 342,000, to dealers last month. Many of these are likely to reach customers only this month.

“Even though there is a blip in July numbers, the industry is continuously introducing new models, especially in the compact SUV segment. Along with this, a better supply in coming months will help in bringing down customer anxiety due to a large waiting period,” said Gulati, adding: “We also urge all PV OEMs to recalibrate their supplies as per the market demand and avoid pushing low-moving stocks.”

Inventory of passenger vehicles is of 20-25 days.

July saw erratic monsoon where some states got less rainfall while others saw floods. The unfavourable weather resulted in decreased kharif sowing as the area under paddy was 13% less from a year earlier at the end of July. Tractor sales, which were showing strong growth till a month earlier, hence, saw a big dip in July, said the FADA.

Gulati also cautioned about the increasing Taiwan-China tensions, which could add to the threat to global supply chains. Taiwan is the largest manufacturer of semiconductors, the supply of which has only started returning to normal for automakers.

“Due to this, the threat of semiconductor shortage is once again looming as chipmaker TSMC raises red flag that if a war hits, Taiwanese chip manufacturers would be rendered ‘non- operable’,” he said.

India’s services sector purchasing manager’s index fell to a 4-month low in July to 55.5, showing that growth momentum lost steam as a result of weaker sales expansion and inflationary pressures. The FADA remains cautiously optimistic due to these factors, as it enters the festival season.

Source : FADA