The Federation of Automobile Dealers’ Association (FADA) is optimistic of the momentum in the automotive market to continue, buoyed by new vehicle launches and increased government spending on infrastructure projects. However, it is also cautious about the risk from a possible fall in monsoon rains this month, which could affect farm output and the rural economy, and in turn hurt the demand for two-wheelers, entry-level passenger vehicles and tractors.
According to data compiled by the FADA, 1,770,181 vehicles were registered in July. While passenger vehicle registrations rose 4.03% from a year earlier to 284,064 units, those of two-wheelers increased by 8.15% to 1,228,139 units and commercial vehicles by 2.02% to 73,065 units.
FADA president Manish Raj Singhania said the numbers were lower month-on-month except for three-wheelers, highlighting short-term slowdowns. Also, compared with the pre-Covid 2019, retail sales were 13% lower, with significant drops in two-wheeler and commercial vehicle segments.
Singhania said despite challenges due to heavy monsoons and the continued shift towards electric vehicles amid high fuel prices, two-wheeler sales showed resilience in July. Inventory of two-wheelers in the channel currently stands at 20-22 days.
In the passenger vehicle segment, there was a surge in order intake. “However, severe monsoons and flood-like situations, especially in North India, impacted sales. SUVs continued to remain a popular choice,” he said. Inventory of passenger vehicles ranges 50-55 days.
Despite adequate availability of stocks and growth in demand for school buses, challenges from erratic weather and high vehicle costs affected demand for commercial vehicles. Singhania said government spending on infrastructure, however, will support demand for CVs in the coming months.
He said macroeconomic indicators also looked positive going ahead. “The two-wheeler sector expects an uptick, driven by upcoming festivals, a harmonious supply-demand equilibrium and the rollout of new models. The three-wheeler category, too, is witnessing a surge in interest, particularly towards electric variants”, he said. Robust demand in the upcoming festive season, good monsoons and pent-up demand should support sales of commercial vehicles in the short-term.