According to data available from the Federation of Automobile Dealers’ Association (FADA), 1,436,927 vehicles in various segments were sold in July, down 7.84% from a year earlier. In fact, sales were 19.92% lower compared to the pre-Covid month of July 2019.
The federation has compiled the figures from the vehicle registration data available on the Vahan dashboard of the Ministry of Road Traffic and Highways. While the numbers are incomplete as some regional shipping offices are still not linked to the Vahan portal, they are seen as a good indicator of the trend in the auto retail industry as manufacturers only disclose their shipments from factories.
Retail sales of tricycles and commercial vehicles increased by 80.41% to 50,349 units and 27.32% to 66,459 units, respectively.
Commercial vehicle retail sales remained strong over the past month, with government spending on infrastructure helping customers finalize their purchases. The bus segment is also witnessing recovery as educational institutions and offices return to normal mode, the FADA said in a statement. Tricycles continued to see increasing demand driven by e-rickshaws as a result of increased passenger numbers. Full recovery to pre-Covid levels, although it will take a while.
New registrations on the Vahan dashboard fell last month in two-wheelers (by 10.92% to 1,009,574 units), passenger cars (by 4.66% to 250,972) and tractors (by 27.72% to 59,573).
“The two-wheeler retail market witnessed poor demand as rural India continues to underperform. This, coupled with high inflation, erratic monsoons and high cost of ownership, continues to keep customers at the bottom of the pyramid at bay,” said FADA president Vinkesh Gulati. The average inventory of two-wheelers in the channel is currently 20-23 days.
In the passenger car segment, although retail sales fell about 5% last month, volumes were higher than in 2019. Automakers had sent a record number of passenger cars, estimated at around 342,000, to dealers last month. Many of these are unlikely to reach customers until this month.
“Even though there is an outlier in July figures, the industry is constantly introducing new models, especially in the compact SUV segment. In addition, better offerings in the coming months will help reduce customer anxiety due to long wait times,” said Gulati, adding: “We also urge all PV OEMs to recalibrate their offerings according to the market demand and prevent them from going low. -moving stocks.”
Inventory of passenger cars is from 20-25 days.
July saw an erratic monsoon, with some states receiving less rain while others saw flooding. The unfavorable weather resulted in less kharif sowing because the area under the paddy rice was 13% smaller at the end of July than a year earlier. Tractor sales, which showed strong growth up to a month earlier, therefore experienced a major dip in July, according to the FADA.
Gulati also warned of rising tensions between Taiwan and China, which could increase the threat to global supply chains. Taiwan is the largest semiconductor manufacturer, whose offerings to automakers are just beginning to return to normal.
“This poses another threat of a semiconductor shortage as chipmaker TSMC raises the red flag that if war breaks out, Taiwanese chip makers would be rendered ‘unusable’,” he said.
India’s services Purchasing Managers Index fell to a 4-month low to 55.5 in July, showing that growth momentum has lost momentum due to weaker sales expansion and inflationary pressures. Due to these factors, the FADA remains cautiously optimistic as the festival season enters.
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