New Delhi: Even though the passenger vehicle registrations saw a year-on-year decline of 5% at 2,50,972 units in July 2022, the segment is witnessing a recovery as retail sales are already higher than 2019, says the data shared by Federation of Automobile Dealers Associations (FADA) on Thursday.
Retail sales of two wheelers also dipped 11% at 10,09,574 units in July 2022, as against 11,33,344 units in July 2021.
According to the dealers’ lobby body report, total vehicle registrations at regional transport offices (RTOs), which are proxy for sales, stood at 14,36,927 units in July this year, marking a drop of 8% compared to 15,59,106 units in July 2021.
On a year-on-year basis, retail sales of all the segments were in red, except three wheelers and commercial vehicles.
In the commercial vehicle segment, major portion of the sales comes from the LCV category which clocked 41,077 units in July 2022, followed by HCV at 18,181 units, MCV at 4,421 units and others at 2,780 units.
In the three wheeler segment, e-rickshaws took the lead at 25,984 units in July 2022, and three wheeler passenger vehicles at 16,708 units. Sales of three wheeler goods and e-rickshaw goods stood at 5,721 and 1,897 units respectively.
Vinkesh Gulati, President, FADA said, “July is generally considered as a lean month before festival season hits in August. When compared with July’19, a pre-covid month, total vehicle retails fell by 20%. PV and Trac continued to outperform by growing 19% and 7%. All the other categories were in red with 2W, 3W and CV falling by -28%, -15% and -4% respectively.”
“The 2W retail run witnessed poor demand as Rural India continues to underperform. This coupled with high inflation, erratic monsoon and high cost of ownership continues to keep bottom of the pyramid customers at bay. The 3W space continued to see demand recovery even though full recovery to pre-covid levels is still some time away. Digging deeper, it is clearly evident that e-rickshaws are the biggest mover in the segment. Demand recovery in the 3W passenger category also shows that covid is now behind us as passenger movement has once again started gaining traction,” he said.
“CV retail figures continue to witness good demand as the Government’s infrastructure push is helping customers in concluding their purchase. Apart from this, the Bus segment also witnessed the beginning of demand recovery as educational institutions and offices are once again back to normal mode,” Gulati added.
According to him, the PV segment is witnessing a dream run as retail sales are already higher than 2019. Even though there is a blip in July numbers, the industry is continuously introducing new models especially in the Compact SUV segment. “Along with this, a better supply in coming months will help in bringing down customer anxiety due to the large waiting period. We also urge all PV OEMs to recalibrate their supplies as per the market demand and avoid pushing low moving stocks.”
FADA said that at the end of July 2022, the average inventory for Passenger Vehicles ranged from 20 to 25 days and that for Two Wheelers ranged from 20 to 23 days.
About the near term outlook, the dealers’ lobby body said that July saw erratic monsoon where some states got less rainfall while others got more than required. The unfavorable weather resulted in decreased Kharif sowing as the area under paddy dipped by 13% at the end of July. Tractor sales which were showing good growth till a month ago hence saw a big dip in July.
After the Russia- Ukraine war, the world is once again facing the threat of the Taiwan- China war. Due to this, the threat of semiconductor shortage is once again looming as chip-maker TSMC raises a red flag that if war hits, Taiwanese chip manufacturers would be rendered ‘non- operable’. India’s services sector PMI (purchasing manager’s index) fell to 4-month low in July to 55.5 showing that growth momentum lost steam as result of weaker sales growth and inflationary pressure in previous month.
“Overall, FADA remains cautiously optimistic due to the above factors as it enters the festival season,” it said.
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On a year-on-year basis, domestic sales for all the segments remained in the green, barring the tractors. However, on a month-on-month basis, PV sales were on an upswing, two-wheeler sales improved and some CV makers reported a drop. Going forward, OEMs are focusing on increasing production in August owing to the beginning of festive season, which will go on till October and accounts for about 40% of the industry’s overall sales.