Underlining an economic recovery and buoyant consumer sentiment, retail sales for the Indian automotive industry grew by 27% on an annual basis, for the month of June 2022, as shown by data released by the Federation of Associations car dealerships (FADA) on Tuesday 5 July.
Sales of passenger vehicles increased by 40%, sales of two-wheelers by 20%, three-wheelers by 212%, tractors by 10% and commercial vehicles by 89%, according to the data.
“Auto Retail for the month of June 22 continued to post its positive run compared to June 21, a month that continued to face the brunt of Covid,” said Vinkesh Gulati, FADA Chairman.
The increase in auto wholesale reflected in recent monthly manufacturer sales figures signaled ease of availability of semiconductors, thereby reducing supply-side constraints, increasing car availability and increasing attendance at exhibition halls, agrees Gulati.
“Waiting time, particularly in the compact SUV and SUV segment, remained elevated. New vehicle launches are seeing robust bookings, reflecting a healthy demand pipeline,” said FADA Chairman, drawing attention to the three-wheeler segment where a major shift has occurred in the electric category.
According to FADA, while a few categories show steady recovery, a full return to pre-Covid normalcy has yet to be seen as total retail vehicle sales show a 9% decline from June figures. 2019.
Retail center shipments of PV and tractors continued to grow 27% and 40%, respectively, over retail sales in 2019. While for the first time, PV sales in June increased by 4% compared to 2019, the two categories that continue to underperform are two-wheelers which are down 16% and three-wheelers which remain down 6%.
Overall retail vehicle shipments in the first quarter of FY2022-23 were up 64% year-on-year compared to the corresponding quarter of FY2021-22, which experienced intermittent lockdowns. The near-term outlook remains worrisome for auto retail, according to FADA projections, with inflationary pressures rising around the world following the Russia-Ukraine crises and the RBI governor signaling high inflation as a major concern.
Over the past few months, prices for almost all essential items have shifted north, putting pressure on the ordinary man’s household budget and reducing his disposable income. Additionally, high fuel prices have had a knock-on effect on transportation and made it expensive.
This, Gulati says, will have a negative effect on entry-level PVs as well as the two-wheeler segment which still remains the main cause for concern and was not picked up as expected, Gulati points out, citing the wrong market sentiment, especially in rural India. , high cost of ownership and inflationary pressure as reasons for low volumes, with June generally being a lean month due to rains which keep sales under pressure.
“If rural India stabilizes, auto retail will enter the festive season on a high note,” Gulati says.
On the wholesale front however, the timely arrival of the monsoons has benefited the two-wheeler industry. Honda Motorcycle and Scooter India (HMSI) reported a 65% increase in domestic market sales to 355,560 units in June 2022 from 212,453 units in the same month last year.
Atsushi Ogata, managing director and president of Honda Scooters and Motorcycles, expects the coming months to continue this upward trend as more customers seek out two-wheeled mobility options.
Domestic two-wheeler sales of Chennai-based TVS Motor Company recorded a 33% growth from 145,413 units in June 2021 to 193,090 units in June 2022. Domestic electric two-wheeler sales include TVS iQube sales of 4,667 units in June 2022, up 77% compared to May 2022.
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