Indian Auto Industry during May’22 continued its flattish run for the third consecutive month, FADA said
MUMBAI, June 6 (the CONNECT) - Passenger vehicle and tractor sales have shown a positive run by growing 11% and 33%, respectively during May but two-wheeler, thee-wheeler and commercial vehicles are yet to bounce back to the pre-COVID days, data from Federation of Automobile Dealers Associations (FADA) shows.
The 2W, 3W and CV segments de-grew by -14%, -19% and 11% respectively, FADA said.
FADA is the apex national body of Automobile Retail Industry in India engaged in the sale, service and spares of 2/3 Wheelers, Passenger Cars, UVs, Commercial Vehicles (including buses and trucks) and Tractors. FADA India represents over 15,000 automobile dealers having 26,500 dealerships including multiple Associations of Automobile Dealers at the Regional, State and City levels representing the entire Auto Retail Industry
Federation President Vinkesh Gulati said, “Indian Auto Industry during May’22 continued its flattish run for the third consecutive 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%, he said.
The Government made a bold 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 2W, the increase in 3rd party insurance premium will act as a deterrer for some, Gulati said.
The 2W segment has seen slight improvement in overall sales when compared with April’22. While 2W EV sales were growing rapidly though on low base, various fire incidents across almost all EV brands has created a fear in the mind of the customer. This coupled with supply chain issues, has decreased 2W EV sales drastically from last month.
The PV 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. Healthy booking and single digit cancellation shows that demand may stay put even when normal supply resumes in months to come, he explained.
While the Russia – Ukraine war continues to create demand supply mis-match 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.
RBI’s observation has come at a time when WPI Index rose by record 15.1% 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 said.