Vehicle retail sales up by 27 %: FADA

Guwahati: The retail sales numbers for all categories of vehicles for June, as announced by the Federation of automobile dealers associations (FADA), shows that the industry clocked 1,550,855 units last month (June 2021: 1,219,657), and registered a year-on-year (YoY) growth of 27.16 percent.

The industry's quarterly performance was likewise on track, with a significant 64 percent increase. Retail sales across vehicle categories were estimated to be 4,832,955 units between April and June 2022, up from 2,944,237 units in the first quarter of FY22. However, compared to the pre-Covid levels of 5,260,403 units in Q1 FY20, there is an 8% decrease.

Passenger vehicles (PVs) saw a 40% increase in sales last month, totaling 260,683 units (June 2021: 185,998). Q1 FY23 sales increased by 64%, from 483,163 units in Q1 FY22 to 793,238 units in Q1 FY23. "The PV segment continued to show solid growth," said FADA president Vinkesh Gulati, "with the increase in wholesales clearly reflecting a relaxation in semiconductor availability."

While Gulati is confident that demand parameters appear to be stable, with a flurry of new car launches resulting in healthy reservations, "waiting periods, notably in the compact SUV and SUV classes, remained high in the month," he added.

Although far from over, the chip crisis has been brought under control to some extent, with industry experts predicting that the problem will be totally fixed by mid-2023. Carmakers are keeping a close eye on the situation and are moving quickly to take remedial moves to control stocks.

The two-wheeler segment, on the other hand, posted cumulative retail sales of 1,119,096 units last month, representing a 20.23 percent increase year on year (June 2021: 930,825). Retail sales in Q1 FY23 were estimated to be 3,538,718 units (Q1 FY22: 2,207,324 / +60.32 percent).

Despite the increase, two-wheelers remained in the slow lane, with FADA citing high acquisition costs, high fuel prices, and inflationary pressures as the primary reasons for the industry's comparatively slower growth rate compared to what it saw in FY20, when it surpassed the four-million-unit mark in the first quarter alone. June is an intrinsically sluggish month for two-wheeler sales in India due to the monsoon reaching major portions of the country.

With the faster shift to electric mobility, three-wheelers more than tripled monthly sales to 46,040 units in June (June 2021: 14,735 / +212.45 percent), while commercial vehicles (CVs) increased by 89 percent, with June retail sales projected at 67,696 units (June 2021: 35,810).

In terms of quarterly figures, Q1 FY23 three-wheeler sales tripled to 129,944 units (Q1 FY21: 41,590). CV sales, on the other hand, more than doubled to 212,886 units in Q1 FY23, up from 104,929 units in Q1 FY21. FADA is optimistic about the CV segment's revival, noting that bus and LCV sales are recovering traction, and that the category saw a 4% increase in June for the first time in three years, when compared to June 2019 retail sales of 65,136 units.

With sales of all vehicle categories in the green, the Indian automobile sector is expected to have a happy festive season, assuming no big external interruptions. However, FADA has voiced concerns about rising inflationary pressures as a result of the Russia-Ukraine issue, as well as high gasoline prices driving up transportation costs. While the reduction in semiconductor supplies is a sign of relief, concerns about the rural economy's fragility remain. "If rural India stabilises, the industry will start the Christmas season on a positive note," Gulati said.