Vehicle registrations increase in double digits across categories in February

Data available with the Federation of Automobile Dealers Association (FADA) showed overall, retail sales of vehicles rose 15.95% to 1.78 million units in February. Sales were, however, lower by about 8% compared with the pre-Covid February 2020.

FADA president Manish Raj Singhania said all automobile categories saw an increase in retail demand last month. Registration of two-wheelers, three-wheelers, passenger vehicles, tractors and commercial vehicles rose by 14.75%, 81.47%, 10.99%, 13.96% and 17.27%, respectively, in February.

Singhania said while sales of two-wheelers grew when compared with the same period last fiscal, the numbers were lower by 14% compared with the same month in 2020 .

“The change in OBD (on-board diagnostics) norms which comes into effect from April along with marriage season kept the sales ticking”, said he, adding, “(But) On the overall, high inflation and poor sentiment has kept the customers at bay.” Network stock of two-wheelers now range between 20-25 days.

In the passenger vehicle segment, demand remained robust. Singhania informed, “Launch of new models, continuously improving supply coupled with healthy booking to cancellation ratio and wedding bells kept the momentum going for this already well to do segment.” Inventory of passenger vehicles currently stand at 35-37 days.

In the commercial vehicle segment registrations went up by 17% supported by government spends on infrastructure. Walk-ins improved during the month with customers considering making purchases before prices rise with the implementation of OBD norms.

“The month of march has multiple festivals like Holi, Ugadi, Gudi Padwa, Navratri etc. This will help push auto sales. Apart from this, better availability of vehicles, last month of the financial year, change in OBD norms from April which will increase vehicle prices, the industry may see schemes being rolled out by the OEMs thus aiding higher sales”, Singhania informed.

Mid-term, though FADA remains cautious about growth prospects. Singhania added, “On the flipside, India’s chief economic advisor said that urban demand recovery is taking place at a faster pace than rural. This along with sharp slowdown in private consumption expenditure to a 2-year low suggests a softening in household spending amid inflationary pressure as post covid pent-up demand starts to fade.”

Apart from this, the Finance Ministry has released a statement that the predictions of a return of El Niño conditions in the Pacific could presage a weaker monsoon in India, resulting in lower output and higher prices. This will act as a dampener for auto sales, fears FADA.

The federation 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, but these are seen as a good proxy for the trend in the automobile retail market as manufacturers only disclose their dispatches from factories.