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Auto retail sales remains flat in May

The automotive retail sales across segments continue to remain flat in May at 16,46,773 units, down 9.6 percent compared to May 2019 (pre-Covid comparison). This also happens to be the third consecutive month of no growth finds the Federation of Automobile Dealers Association (FADA).

The Vahan data comprises 91.6 percent of RTOs (Regional Transport Offices) with the newest addition being the Andhra Pradesh state, with this now only Telangana, Madhya Pradesh and Lakshadweep have to share their data with Vahan.

Vinkesh Gulati, president, FADA said said, “Indian Auto Industry during May’22 continued its flattish run for the 3rd consecutive month. While YoY comparison with May’21 shows exceptionally healthy growth rate across all categories, it is important to note that both May’21 and May’20 were affected by nation-wide lockdown due to covid thus witnessing. Hence a better comparison will be with May’19 which was a normal pre-covid month. Similar to last month, May’22 when compared to May’19 reveals that auto retail is still not on growth trajectory as overall retails were down by -10%. While PV and Tractors continued its positive run by growing 11% and 33%, 2W, 3W and CV are yet to show any signs of healthy run-rate (compared to pre[1]covid months) as they de-grew by -14%, -19% and 11% respectively.”

He commended the government’s decision to cut excise duty on fuel prices thus reducing inflation and economic distress. While this will have a positive rub-off on sale of vehicles especially two-wheeler segment, the increase in 3rd party insurance premium will act as a deterrer for some.

The segment saw slight improvement in overall sales when compared with April’22. On the other hand, the electric two-wheeler sales grew rapidly though on low base, FADA states that various fire incidents across almost all EV brands have created a fear in the mind of the customer. This coupled with supply chain issues decreased the e-2W sales drastically from last month.

The passenger vehicle segment which has already surpassed May’19 numbers is witnessing huge demand. “Dealers are not be able to fulfil the same due to supply side issues. This has not only led to an increase in waiting period (ranging from 3 months to 2 years) but is also keeping the customers frustrated,” revealed Gulati.

He said healthy booking and single digit cancellation shows that demand may stay put even when normal supply resumes in months to come. In the commercial vehicle segment, buses are showing good demand due to re-opening of educational institutions.

Giving his outlook, Gulati said while the Russia – Ukraine war continues to create demand supply mismatch thus delaying the availability of PVs, RBI has warned of more inflation as the increase in wholesale prices will get passed on to the end consumers. This will result in a lower disposable income which will ultimately hamper auto sales.

Auto Retail Sales In India

CategoryMay ’22May ’21Change (YoY)May ’20May ’19
Passenger vehicles263,15286,479204%31,951236,215
Commercial vehicle66,63217,607278%1,04975,238

“RBI’s observation has come at a time when WPI Index rose by record 15.1 percent in the wake of high commodity prices and the impact of the breakdown in supply chains due to the war and the strict lockdown by China. FADA hence continues to remain cautious for any further recovery in auto sales in the near term,” concluded Gulati.

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