Vehicle registrations down by 47% in June 2020: Vehicle Scrappage Policy in need to revive CV demand

The Federation of Automobile Dealers Associations reports that vehicle registrations in the month of June 2020 declined by a substantial 47% overall, but certain segments and demographics helped saw growth. FADA has highlighted measures to boost demand for the Indian auto industry.

By:Published: July 21, 2020 2:23 PM

The Federation of Automobile Dealers Associations (FADA) has released the monthly vehicle registration data for the month of June 2020. FADA reports that in June 2020, the number of vehicles registered across the country was down by 47% compared to the same period in the corresponding month of 2019. However, it also reports that the number of registrations in June 2020 is higher than May 2020 suggesting a growth trend in the demand. The rural market in India saw good recovery which allowed for a rise in sales volume of tractors, while also positively impacting sales of two-wheelers and small commercial vehicles. On a year-on-year basis, FADA reports that two-wheeler sales declined by -40.92%, three-wheelers negative growth of -75.43%, Commercial Vehicles segment saw degrowth of -83.83% while Passenger Vehicle sales dropped by 3834%. However, the demand for Tractors saw a steady rise of 10.86%.

Ashish Harsharaj Kale, FADA President said “Unlock 1.0 coupled with an increase in demand from the rural market has boosted the retail sales with respect to the May month’s numbers. At the end of June, Almost 100% dealership outlets (showroom and workshops) were operational across the country, barring a few cities and towns which have once again implemented stringent Lockdown. June registrations, although better than May is still not Indicative of the actual demand situation as Lockdown woes continue in some parts and supply side is far from its complete potential”

Kale mentioned that the robust crop situation in the last harvest season and the arrival of the monsoon has allowed the demand from the rural market to recover when compared to urban areas. He added that the positive sentiment in the rural areas if backed with demand boosting measures can help ensure a quicker return to normal.

FADA continues to urge the Indian Government to introduce an incentive-based scrappage policy which it believes can help revive the Commercial Vehicle sector, especially the Medium and Heavy Commercial Vehicles sector.

The auto dealer’s union projects that if there is no further lockdown and more reopening measures, in the month of July 2020, a similar upward trend bettering the numbers of June 2020 may be seen. However, FADA does not expect normalcy in demand before the festive season.

FADA expect the Tractor segment to continue to grow and onwards to clock positive annual growth. But the overall auto industry is projected to witness a de-growth range of 15% – 35% across various segments in FY21.

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