Monsoon, lower rural demand impact July retail sales

Vinkesh Gulati, FADA President pointed out that the “The two-wheeler retail run witnessed poor demand as rural India continues to underperform. High inflation, erratic monsoon and high cost of ownership continues to keep bottom of the pyramid customers at bay.”

Monsoon, lower rural demand impact July retail sales
The impact of the erratic monsoon and delay in Kharif also affected the July tractor sales, down over 27% YoY to 59,573 units.

Erratic monsoon, lower demand from rural India and a generally lean month factor before festive season led to 8 percent YoY drop in overall vehicles sales as per the July FADA data. Total vehicle sales are down to 14,36,927 units. Compared to July 2019, the retail sales are down nearly 20%.

The two-wheeler market is amongst the worst affected. July total two-wheeler sales have come in  at 10,09,574 units, down 10.92% from 11,33,344 units sold in July 2021. Compared to July 2019 sales of 13,99,532 vehicles, it is down nearly 28 percent.

Vinkesh Gulati, FADA President pointed out that the “The two-wheeler retail run witnessed poor demand as rural India continues to underperform. High inflation, erratic monsoon and high cost of ownership continues to keep bottom of the pyramid customers at bay.”

The impact of the erratic monsoon and delay in Kharif also affected the July tractor sales, down over 27% YoY to 59,573 units compared to 82,419 units sold last July. The only glimmer of hope is that this sales tally is still 7 percent higher than the total tractors sold in July 2019 at 55,571 units. Overall CV sales however continue to outperform, up 27.31% at 66,459 units from 52,197 units sold in July 2021.

All India Vehicle Retail Data for July ’22.

July passenger vehicle sales also showed a similar trend as the tractors. Sales came in at 2,50,972 units, down 4.66% from 2,63,238 vehicles sold in July 2021. However, the sales numbers are up almost 20 percent compared to July 2019 sales of 2,10,775 vehicles.

FADA remains cautiously optimistic going into the festival season. Gulati pointed out that India’s services sector PMI (purchasing manager’s index) fell to 4-month low in July to 55.5 showing that “growth momentum lost steam as result of weaker sales growth and inflationary pressure in previous month.” The threat of Taiwan- China war and potential risk of renewed semiconductor shortage also remains a key overhang for the market. 

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