Vehicle registrations see healthy double-digit growth in June amid sustained demand

According to data compiled by industry body Federation of Automobile Dealers’ Association (FADA), retail sales of automobiles went up by 9.57% to 1,863,868 units in June.

Vehicle registrations across categories including two-wheelers, three-wheelers, passenger vehicles, tractors and commercial vehicles rose by 7% (to 1,310,186 units), 75% (to 86,511 units), 5% (to 295,299 units), 41% (to 98,660 units) and 0.4% (to 73,212 units), respectively.

FADA President Manish Raj Singhania said, “”Despite a 10% YoY growth, auto retail sector has seen an 8% MoM dip, indicating a short-term deceleration in sales…(However) India’s growth narrative remains resilient. The month of June’23 registered all-time highs for 3W, PV and tractor segments when compared to all the previous June’s.”

Singhania informed when compared to pre-COVID levels, overall auto retail saw a marginal decrease of 3%, on account of slow sales in the two-wheeler segment. Conversely, the CV segment experienced a 1.5% growth compared to June’19, surpassing the pre-COVID levels for the first time.

In the month under review, two-wheeler sales were impacted due to supply constraints from certain OEMs and some softening in demand because of broader economic conditions and higher costs at the entry-level. “New model introductions, festive promotions and seasonal factors couldn’t markedly boost sales. A 12% MoM drop was observed in two-wheeler sales, with electric vehicle sales witnessing a 56% MoM decline, primarily due to the government reducing FAME subsidies, triggering extreme price hikes” Singhania added.Two-wheeler stocks in the network currently ranges between 20-25 days.In the passenger vehicle segment, dealers reported sporadic supplies of popular models and aging product concerns of slow moving variants. Singhania said the segment still experienced an uptick in demand for new models and anticipates rural sales to pick up further pace.

Inventory of passenger vehicles in the channel now stand at 45-49 days.

Commercial vehicle registrations too were impacted by supply constraints. Despite fluctuating demand and vehicle availability issues, the government’s push towards infrastructure development and growth in the coal mining spurred sales of heavy commercial vehicles.

Singhania said while there is expected to be some pressure on two-wheeler sales on account of limitations in supplies and adverse economic conditions the three-wheeler segment will continue to grow near-term.

In the passenger vehicle segment while the launch of new models and potential rise in rural sales lend optimism, demand-supply mismatches, stand to impact profitability of dealers, Singhania held. “However, the anticipation of a boost from the upcoming festive season in end-August offers a hopeful outlook”, he said.

Overall, FADA said, delayed and uneven rains stand to reduce crop yields, shorten crop cycles and cause a delay in future crop arrivals. Singhania informed, “Such developments may affect the sales of automobiles, particularly in rural areas where a weak agricultural season could lead to a reduction in disposable income, thus affecting demand for two-wheelers and entry-level cars. Yet, upcoming rains may potentially boost agricultural prospects, revive rural demand, and positively influence automotive sales.”

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.