Growth in retail sale of vehicles, further increase expected as markets open: FADA

The auto dealers’ body expects positive momentum to continue in July and demand to further pick up, especially as markets in Southern India open up.

Driven by pent up demand and a low base, total retail sales of vehicles across segments registered a growth of 22.62% to over 12.12 lakh units in June 2021. However, compared to June 2019 (pre-COVID sales), the total sales are lower by about 28% from over 16.98 lakh units, according to the Federation of Automobile Dealers Associations (FADA).

On a year-on-year basis all vehicle categories saw growth in sales last month, led by commercial vehicles (CVs), which grew 236% to 35,700 units due to a very low base due to non-availability of BS-6 vehicles. Passenger vehicle (PV) sales were up 43.45% to about 1.84 lakh units, three wheeler sales grew 21.98% to 14,732 units, two-wheeler sales rose nearly 17% to 9.30 lakh units and sales of tractors was higher by 14.27% at 52,261 units.

“The month of June witnessed re-opening for most of the states except the ones in the South…The industry witnessed a high pent up demand. Two-wheelers, though in green, have witnessed a softer recovery as rural market is taking time to get back from post covid stress,” FADA President Vinkesh Gulati said.

He added that overall, the industry is still not out of the woods and tractors in the only category which has seen growth over June 2019.

The auto dealers’ body expects positive momentum to continue in July and demand to further pick up, especially as markets in Southern India open up.

“Continued global semiconductor shortage is creating demand-supply mis-match and restricting the growth of PVs. Further, while the new virus mutants and a prediction of 3rd wave in August are affecting sentiments, the revival of monsoons in July after a pause of two weeks and a better vaccination drive rate continues to build some hope,” FADA said.

It added that the sector is in a wait and watch mode to see how the overall economy shapes up over the next couple of months. “We hence see demand to be a mixed bag and hope that recovery is back on track by the time Navratri and Diwali knock at our door,” it said.

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