RBI’s repo rate hike to dampen buying sentiments: FADA

The Federation of Automobile Dealers Associations (FADA) which released its vehicle retail data for April 2022 says that on a year on year basis,  total vehicle retail for April 2022  increased by 37 percent.

The other vehicle categories including two-wheelers, three wheelers, PV, tractors and CV and were up by 38 percent, 96 percent,  25 percent, 26 percent and 52 percent respectively.

However, in comparison to April 2019, the FADA said apart from the passenger vehicles and tractors segments which  grew by 12 percent and 30 percent, the two-wheeler, three-wheeler and CV segments were down by 11 percent, 13 percent and 0.5 percent.

The FADA also said that while year-on-year comparison with April 2021 showed an uptick in all vehicle segments, it highlighted the fact that the numbers for both April 2021 and April 2020 were affected by the nation-wide lockdown due to Covid wave which resulted in little or no business.

According to FADA president, Vinkesh Gulati, in comparison to April 2019, which was a normal pre-covid month, the numbers for April 2022 suggest that “we are still not out of the woods as overall retails were down by 6 percent”.

In its near-term outlook, FADA said that due to the war in the Ukraine and the China lockdown, the global auto sector continues to see a semiconductor shortage along with high metal prices and container shortages.

The Association also said that RBI’s move of increasing repo rate by 40 bps has clearly taken everyone off guard. This move, it said, will apply brakes and dampen the sentiments further. However, there is cause for cheer given that according Skymet, India is expected to get a normal monsoon and this would have a positive rub-off on rural sentiment which have been lacklustre thus far.

Also read
CV sales lacklustre in April