War Clouds Over Taiwan May Dampen Auto Growth

After Ukraine crisis, China-Taiwan tussle threatens auto market

War Clouds Over Taiwan May Dampen Auto Growth

Vehicle Sales See 8% Dip In July

Inflation and high cost of ownership are also impacting buyer sentiment, Federation of Auto Dealers’ Associations said.

MUMBAI, Aug 4 (The CONNECT) – Automobile sales are yet to achieve pre-COVID levels.

Inflation and high cost of ownership are also impacting buyer sentiment, going by sales for July’22.

The Federation of Automobile Dealers Associations (FADA) said Auto Retail for the month of July’22 fell by -8%. July is generally considered as a lean month before festival season hits in August.

When compared with July’19, a pre-covid month, total vehicle retails fell by -20%. PV and Trac continued to outperform by growing 19% and 7%. All the other categories were in red with 2W, 3W and CV falling by -28%, -15% and -4% respectively.

The 2W retail run witnessed poor demand as Rural India continues to underperform. This coupled with high inflation, erratic monsoon and high cost of ownership continues to keep bottom of the pyramid customers at bay.

The 3W space continued to see demand recovery even though full recovery to pre-covid levels is still some time away. Digging deeper, it is clearly evident that e-rickshaws is the biggest mover in the segment. Demand recovery in 3W passenger category also shows that covid is now behind us as passenger movement has once again started gaining traction.

FADA President Vinkesh Gulati said  July saw erratic monsoon where some states got less rainfall while others got more than required. The unfavourable weather resulted in decreased Kharif sowing as area under paddy dipped by 13% at the end of July. Tractor sales which were showing good growth till a month ago hence saw a big dip in July.

After Russia- Ukraine war, the world is once again facing the threat of Taiwan- China war. Due to this, the threat of semi-conductor shortage is once again looming as chip-maker TSMC raises red flag that if war hits, Taiwanese chip manufacturers would be rendered ‘non- operable’, Gulati said.

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.

CV retail figures continue to witness good demand as Government’s infrastructure push is helping customers in concluding their purchase. Apart from this, the Bus segment also witnessed beginning of demand recovery as educational institutions and offices are once again back to normal mode.

The PV segment is witnessing a dream run as retail sales are already higher than 2019. Even though there is a blip in July numbers, the industry is continuously introducing new models especially in Compact SUV segment. Along with this, a better supply in coming months will help in bringing down customer anxiety due to large waiting period. We also urge all PV OEMs to recalibrate their supplies as per the market demand and avoid pushing low moving stocks.

Overall, FADA remains cautiously optimistic due to the above factors as it enters the festival season, FADA chief added.  

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