Relatively better semiconductor supplies and high demand saw improved retail sales of passenger vehicles in March, but two-wheelers continued to face headwinds due to high ownership costs, which has impacted rural demand in a big way.
Although the retail sales of passenger vehicles declined 4.87% year-on-year (y-o-y) in March, there was an improvement of 13.97% in comparison to February, data released by Federation of Automobile Dealers Associations (Fada) on Tuesday showed.
“The passenger vehicle segment is being driven by SUVs and new launches. Even as the prices are increasing due to high input costs, this segment will do well as there is high demand. I am positive that FY23 will be the best year for this segment in the past seven-eight years. It will see a phenomenal growth provided that the semiconductor situation does not worsen,” Vinkesh Gulati, president, Fada, told FE, predicting the segment to grow over 20% in FY23.
Two-wheeler retail sales declined by 4.02% y-o-y in March. “The transition to BS6 norms has hit the two-wheeler segment like anything. An entry-level model, which you could get earlier for `40,000 plus (on-road), now costs over `60,000 (on-road),” Gulati said, adding that the electric vehicle (EV) hype has also created a bit of a dent in sales. However, he still expects the retail sales of two-wheelers powered by internal combustion engine (ICE) to grow by 5-6% in FY23.
The sales of three-wheelers and commercial vehicles jumped 26.61% y-o-y and 14.91% y-o-y, respectively, in March. However, the tractor retails dropped 8.16% y-o-y.
“The commercial vehicle segment has no doubt done a good job. But the main issue is that we saw a major dip in 2018 when the axle load norms were announced. The segment is still far below the pre-axle load norms numbers. However, with the kind of growth we are seeing, we might achieve those numbers in a year or two,” Gulati observed.
