FADA’s auto retail sales for December slipped into negative zone after almost two months of consistent growth. Overall auto retail came at 1,622,317 units, down 5.4 percent YoY as per the Federation of Automobile Dealers Association (FADA). The two-wheeler segment which makes up for the bulk of volume was down 11.19 percent, thus pulling the overall retail in the red.
Compared to the pre-Covid levels, auto sales were down over 11 percent compared to December 2019 levels. The Passenger Vehicle sales in December however offered some hope amid overall doon. On a year-on-year basis, PV sales are up 8.5 percent compared to last December.
For 2022, while total vehicle retails grew by 15% YoY and 17% compared to 2020 it failed to surpass 2019 retails, (a pre-covid year) and registered a fall of -10%. The passenger vehicle category during the period continued to gain new ground by clocking 34.31 lakh retails during the full year. This is by far, the highest retail passenger vehicle has done to date.
FADA attributed the slowdown in sales to factors such as a rise in inflation, increased cost of ownership, rural market yet to pick up fully, and increased electric sales. It states that the ICE two-wheeler segment is yet to see any green shoots.
Coming to the three-wheeler segment which was witnessing a slowdown during Covid, saw recovery and has now narrowed its gap when compared to 2019. Within the segment, the electric rickshaw sub-segment saw triple-digit growth thus pushing the EV market share above the 50 percent mark.
The commercial vehicle continued to grow during 2022 and was now almost at par with 2019 retails. There was an uptick in demand in LCV, HCV, buses, and construction equipment’s driven by the government’s continued push for infrastructure development.
The tractor segment was the only other segment apart from PV which has grown well above 2020 and 2021 and pre-covid year of 2019. It also registered a new lifetime high sale of 7.94 lakh units. This was primarily driven by a consistently good monsoon, improved cashflow with farmers, better MSP of crops and the government’s focus on better procurements. Apart from this, timely sowing of the rabi crop also helped to continue this momentum. Festive season sales which were normal after 3 years also played a part in this strong momentum.
Manish Raj Singhania, President, FADA said, “December went into lull after 2 super months of October and November which witnessed adrenaline rush in the entire auto industry.”
FADA maintains caution on Q4 FY2023
In its outlook for Q4 FY2023, FADA says the global geopolitical headwinds, tightening monetary policy and the lingering effect of the pandemic has combined to create a gloomy global outlook. The Reserve Bank of India has also increased the repo rate by 225 basis points since May 2022. However, supported by domestic growth, India is projected to be one of the world’s fastest-growing economies. The first 15 days of January usually see low sales prior to Lohri/ Sakranti.
It says that OEMs have done routine price hikes in December and announced the same at the beginning of this year. Apart from this, the implementation of BS-VI phase 2 norms will further lead to price hikes across all categories. To counter this, OEMs should announce special schemes to sustain retail sales momentum.
“Due to inflation pressure, the upcoming change in vehicle norms resulting in price hikes, FADA remains cautious during Q3 of FY2023,” concluded Singhania.