Auto retail sales rise in May on strong demand

Retail sales of motor vehicles in the country increased 10.14% year on year to 2,019,414 units in May, shows data compiled by industry body Federation of Automobile Dealers Associations (FADA) based on vehicle registrations. Vehicle registrations — a proxy for retail sales as manufacturers in India only disclose their monthly dispatches from factories — increased across categories, with two-wheelers reporting a 9% jump at 1,493,234 units and passenger vehicles rising 4% to 298,873 units in May.

Sales of three-wheelers, tractors and commercial vehicles rose by 79% at 79,433 units, 10% at 70,793 units, and 7% at 77,135 units, respectively. “While there has been a slight decline of -2% compared to pre-Covid levels, the overall retail figures have shown improvement,” FADA president Manish Raj Singhania said.

“Two-wheeler and commercial vehicle sales did continue to face some challenges, recording high singledigit setback of -8% and -7%, respectively (compared to May 2019).”

Last month, two-wheeler sales were positively influenced by seasonal factors like the marriage season, changes in FAME subsidies effective from June, and the recovery of rural demand, which hint towards a promising future, Singhania said. Two-wheeler stocks in the network currently ranges between 15-20 days. In the passenger vehicle segment, improved availability of vehicles, pending orders, and robust demand for new launches drove a positive momentum, helping the segment rebound after a slump in the previous month. Inventory of passenger vehicles in the channel now stand at 40-45 days.

“The PV sector expects increased demand, particularly for new models, compact and full-sized SUVs and EVs, but inventory pressure and right model availability could pose challenges,” Singhania said.Commercial vehicle registrations, too, experienced sustained growth, supported by the government’s focus on infrastructure development.The bus segment displayed a notable increase, driven by improved financing options and higher sales in academic institutions, Singhania said. In the case of two-wheelers, while seasonal factors boosted demand last month, Singhania said concerns like weather-induced walk-in reductions, inventory, and regulatory norms persist.

“The CV sector anticipates improved vehicle availability but concerns about RDE [real driving emissions] norms and seasonal effects may impact sales,” he said.

To maintain healthy demand in the ecosystem, FADA has called for collective action to regulate inventory levels, negotiate lower interest rates, and support two-wheeler dealers by eliminating illegal MBO sales. The industry body said while it acknowledges nearterm challenges, it continuous to be cautiously optimistic about the potential for growth through collaborative efforts and alignment with market trends.

FADA has compiled the numbers from the vehicle registration data available on the road transport and highways ministry’s Vahan dashboard. The numbers are incomplete as some regional transport offices are still not linked to the Vahan portal.