Vehicle sales surge 8% on strong demand and easing supply woes

As many as 15,21,490 vehicles were sold last month, which is an increase of 8.3% over 14,04,704 units sold in the same period last fiscal, as per data available with the Federation of Automobile Dealers Associations (FADA). Sales were, however, lower by 7% when compared with August 2019.

Sales of tractors declined by nearly a third, on a high base, in the month under review. However, demand inched up across other categories. Passenger vehicle sales rose 6.5% to 2,74,448 units in August. Retail sales of three-wheelers and commercial vehicles increased by 83.14% to 56,313 units and 24.12% to 67,158 units, respectively.

Given the momentum in the market, the industry is set to record best-ever car sales in a decade this festive period, said Manish Raj Singhania, the new chief of the industry body.

“The PV (passenger vehicle) segment continues to be on a bull run as demand for all sub-categories of vehicles except entry-level remained strong,” he said. “This is also aided by new feature-rich launches which OEMs (original equipment manufacturers) are doing since last few months.”

With the shortage of semiconductors easing, vehicle availability has improved but waiting periods persist due to strong demand in higher, feature-rich variants. The average inventory of passenger vehicles in channels now stands at 30-35 days.

The federation has compiled the numbers from the vehicle registration data available on the Vahan dashboard of the Ministry of Road Transport & 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 commercial vehicles remained steady last month with government spending on infrastructure, new launches by automakers and better conversion in fleet operations. The passenger carrier segment, too, saw good traction with educational institutions and offices getting back to normal. Three-wheelers continued to see an upswing in demand driven by e-rickshaws due to increased movement of passengers, equalling 2019 sales for the first time, said FADA.

Retail sales in the two-wheeler segment went up by 8.5% to 10,74,266 units. However, with rural markets under stress, volumes remained below pre-Covid levels. “This coupled with price hikes has made the 2W product out of reach for most entry-level customers,” Singhania said. “With erratic monsoon, the crop realisation has been low and flood-like situation has restricted customer movement.”

The average inventory of two-wheelers in the channel currently is 30-33 days. While September has Onam and Navratri, it also brings the 15-day period of Shraadh, generally considered an inauspicious period for buying vehicles, he said.