Domestic Automobile Retail Sales Grows 10% in June 2023: FADA June 2023 recorded multiple segment all-time highs as 3W, PV and Tractor showed maximum strength when compared to previous June's.
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Despite a 10 per cent year-on-year growth (YoY), the auto retail sector has seen an 8 per cent month-on-month (MoM) dip, indicating a short-term deceleration in sales. The month of June 23 registered all-time highs for three-wheeler, passenger vehicles and Tractor segments when compared to all the previous June's, said FADA in its report.
"Despite a 10 per cent YoY growth, the auto retail sector has seen an 8 per cent MoM dip, indicating a short-term deceleration in sales. Analyzing individual categories on a YoY basis, 2W, 3W, PV, Tractor and CV segments observed growth rates of 7 per cent, 75 per cent, 5 per cent, 41 per cent and 0.5 per cent respectively. In comparison to pre-COVID levels, the overall auto retail marked a marginal decrease of 3 per cent, with 2W as the sole laggard. Conversely, the CV segment experienced a 1.5 per cent growth compared to June 19, surpassing the pre-COVID levels for the first time," said Manish Raj Singhania, FADA President.
The two-wheeler sector wrestled with supply constraints from certain OEMs and a softer demand attributed to economic conditions and higher entry-level bike costs. New model introductions, festive promotions and seasonal factors couldn't markedly boost sales. A 12 per cent MoM drop was observed in two-wheeler sales, with electric vehicle sales witnessing a 56 per cent MoM decline, primarily due to the government reducing FAME subsidies, triggering extreme price hikes.
The shift towards alternative fuels, predominantly EVs, continues to play a significant role in driving this growth, despite potential supply concerns due to non-availability of OBD2 vehicles.
The PV segment navigated through a mixed landscape characterized by variable demand, dynamic product portfolios and oscillating market sentiments. With dealers noting sporadic supplies of popular models and aging product concerns of slow moving variants, the segment still experienced an uptick in demand for new models and anticipated rural sales to pick up further pace.
The CV segment confronted mixed dynamics influenced by inconsistent demand, supply issues, government policies and external market factors. Despite fluctuating demand and vehicle availability issues, the government's infrastructural push and coal mining growth spurred demand for heavy commercial vehicles, counteracted by high-interest rates and rising prices.
July 23's Auto Retail Outlook signals mixed trends. The two-wheeler market anticipates continued supply challenges and economic pressures, despite new schemes and expectations of monsoon-boosted sentiment. Meanwhile, the cutback in FAME subsidies casts a shadow over EV sales. Conversely, the three wheeler market predicts growth, underpinned by favorable market responses and rising demand. The passenger vehicle segment faces a dichotomy of factors. While the launch of new models and potential rise in rural sales lend optimism, dealers navigate inventory pressures from OEMs and demand-supply mismatches, impacting profitability. However, the anticipation of a boost from the upcoming festive season in end-August offers a hopeful outlook. The commercial vehicle sector contends with a balance of positive market sentiment and potential monsoon impacts, with demand spurred by infrastructural projects and improved financing options.
