May sales cause of cheer but still short of pre-Covid levels : FADA

Supply chain constraints and geopolitical instability will cast a shadow on availability whereas rising inflation and high inflation could further impact two-wheeler sales.

Autocar Pro News Desk By Autocar Pro News Desk calendar 06 Jun 2022 Views icon5899 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

The Federation of Automobile Dealers Associations (FADA)’s retail sales data for May 2022 saw sales across all vehicle categories increase three-fold but these numbers have to be seen against an extremely low base of May 2021 when the country witnessed its devastating second Covid wave with curfews, and lockdowns  that almost brought the country to a halt.

In terms of the numbers, retail volumes rose to 1,646,773 units (May 2021: 536,795 / +207%). The passenger vehicle (PV) segment registered total volumes of 263,152 units (86,479 / +204%), while two-wheelers too recorded a near-three-fold increase to 12,22,994 units (410,871 / +198%).

The commercial vehicle segment clocked sales of 66,632 units (17,607 / +278%), whereas three-wheeler retail volumes grew to 263,152 units (86,479 / +204%) in May 2022. With economic activity opening up to a greater extent, and with the resumption of schools and offices, FADA report also indicated an uptick in bus sales within the CV segment.

However, a more realistic comparison to ascertain the growth direction would actually be with the pre-Covid numbers of May 2019. On the basis of that, there was an overall de-growth of 9.66 percent with May 2022 retail sales of 1,646,773 units falling short of 1,822,900 units clocked in May 2019. The two-wheeler segment continues to be in the doldrums with a decline of 14 percent de-growth over May 2019’s volumes of 1,420,563 units. The key reasons that could be attributed to this sustained decline is higher costs of ownership, including insurance as also high fuel prices.  Job losses and businesses shutting down has also contributed to the weak buyer sentiments.

The FADA described the government’s decision to excise duty on fuel prices, as “bold” saying it would have a positive effect on sales of vehicles, especially two-wheelers, even as the increase in third-party insurance premiums will act as “a deterrent for some”.

With respect to two-wheeler EV sales, the dealer body witnessed a rapid growth in volumes in May, however, the recent spate of fires in some brands, has raised a word of caution, leading prospective customers to prefer sitting on the fence.

While the three-wheeler and CV segments too reflect a de-growth of 19.32 percent, and 11.44 percent, respectively, when compared to May 2019 figures, the PV segment with an 11.40 percent growth over May 2019 as well as the tractor segment which clocked 52,487 units in May 2022, and registered a noticeable 33 percent growth over May 2019’s 39,438 units, saved the blemishes for the automobile sector last month.

The growing PV volumes, however, continue to face the unending challenge of supply-side issues, particularly the global semiconductor shortage, making vehicle dealers unable to fulfil customer demand, with soaring wait times from between “three months and two years” depending upon the model.

“The situation is keeping the customers frustrated. The levels of healthy bookings and single-digit cancellations show that the demand may stay put even when normal supply resumes in the coming months,” the FADA statement added.

While there are signs of recovery, particularly in a few vehicle segments, the dealer body has issued caution for future recovery, with headwinds such as the ongoing Ukraine-Russia war as well as lockdowns in China continuing to throw a spanner in the works for the global automobile industry, which struggles to source parts as it battles the rising commodity prices.

Tags: FADA
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