fada: Auto retail sales slow in May : FADA

Auto retail sales tripled last month, in line with wholesale shipments, albeit on a weak base as operations were halted due to the outbreak of the second wave of the pandemic in May 2021.

According to data available from the Federation of Automobile Dealers Associations (FADA), 1,646,773 vehicles were sold at retail last month, compared to 536,795 units in the same period last year. However, sales were down around 10% compared to May 2019 pre-covid.

Indian automakers report wholesale shipments from factories, not retail sales to customers. Registration numbers are therefore used as an approximation.

FADA Chairman Vinkesh Gulati informed that registrations increased in all categories last month, on a weak basis as retail sales in May 2020 and May 2021 were weak due to the first and second wave of the pandemic. “The Indian automotive industry in May 2022 continued its stagnation for the third consecutive month. While the year-on-year comparison to May 2021 shows an exceptionally healthy growth rate across all categories, it is important to note that May 2021 and May 2020 was affected by the national lockdown due to covid, so a better comparison will be with May 2019 which was a normal pre-covid month.

Category % change compared to May 2021 % change compared to May 2020 % change compared to May 2019
Passenger vehicles 204.30 723.61 11:40 a.m.
Commercial vehicles 278.44 6251.95 -11.44
Two wheels 197.66 658.32 -13.91
three-wheeler 695.93 2090.40 -19.32
Tractors 215.75 414.93 33.09
TOTAL 206.78 697.99 -9.66

Even though retail sales of passenger vehicles and tractors increased by 11.40% (to 263,152 units) and 33.09% (to 52,487 units) compared to May 2019; registrations of two-wheelers, three-wheelers and utility vehicles have not yet gone green since these categories have fallen by -13.91% (to 12,22,994 units), -19.32% (to 41,508 units) and -11.44% (to 66,632 units), respectively.

Gulati said the government’s decision to cut fuel excise duties will help keep inflation in check and boost vehicle sales, especially two-wheelers. But rising liability insurance premiums are likely to act as a drag on motorcycle and scooter buyers as they come in and make their buying decision.

Gulati said, “The two-wheeler segment saw a slight improvement in overall sales compared to April 22. electric vehicle brands have created fear in the mind of the customer. This, coupled with supply chain issues, has significantly reduced sales of two-wheeled electric vehicles compared to last month.

The data was collated by FADA from the Ministry of Road Transport and Highways (MoRTH) VAHAN platform. VAHAN captures data from 1,481 of the country’s 1,616 RTOs. FADA said that with the migration of the Andhra Pradesh Ministry of Transport to the VAHAN platform, the data reflects the records of 91.6% of RTOs in India.

But even as demand has remained strong in the passenger vehicle segment, Gulati warned with the Russian-Ukrainian war and covid-induced lockdowns in China, the global auto industry continues to experience supply disruptions, especially semiconductors. The RBI has also warned of increased inflation as the increase in wholesale prices will be passed on to the consumer, decreasing their disposable income. RBI’s sighting comes at a time when the WPI index rose a record 15.1% on the back of high commodity prices.

Customers in the passenger vehicle segment will continue to face long wait times due to supply issues. Average passenger vehicle inventory currently ranges from 15 to 20 days, compared to the norm of 30 to 45 days. “Healthy bookings and single-digit cancellations show that demand can remain stable even when normal supply resumes in the coming months,” he said.

Meanwhile, in the commercial vehicle segment with the reopening of educational institutions, buses are showing good demand.

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