Automobile retail sales in slow lane in May: FADA

Retail sales of passenger vehicles grew last month but the sales of two-wheeler and commercial vehicles remained low compared to the pre-Covid month of May 2019, according to automobile dealers' body FADA.

On Monday, FADA said that overall auto retails stood at 16,46,773 units in May, down from 18,22,900 units in May 2019.

"May 2022 retails when compared to May 2019 reveal that sales are still not on a growth trajectory as overall retails were down by 10 per cent. While PV and tractors continued its positive run... two-wheeler, three-wheeler and CV sales are yet to show any signs of healthy run-rate," Federation of Automobile Dealers Associations (FADA) President Vinkesh Gulati said in a statement.

While a Year-on-Year (Y-o-Y) comparison with May 2021 shows an exceptionally healthy growth rate across all categories, it is important to note that both May 2021 and May 2020 were affected by nationwide lockdown due to the Covid pandemic, he stated.

According to him, a better comparison will be with May 2019 which was a normal pre-Covid month.

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Last month, the Passenger Vehicle (PV) retail sales stood at 2,63,152 units. This was 11 per cent higher compared to 2,36,215 units sold in May 2019.

The retails in Covid-hit May 2021 and May 2020 stood at 86,479 units and 31,951 units, respectively.

"The PV segment which has already surpassed May 2019 numbers is witnessing huge demand. Dealers are not able to fulfil the same due to supply-side issues," he said, adding that this has led to an increase in waiting period ranging from three months to two years.

"Healthy booking and single-digit cancellation show that demand may stay put even when normal supply resumes in months to come," Gulati noted.

Last month, two-wheeler sales stood at 12,22,994 units. It was at 4,10,871 units in May last year.

In May 2019, the two-wheeler retails stood at 14,20,563 units.

"The two-wheeler segment has seen a slight improvement in overall sales when compared with April this year," Gulati said.

While the electric two-wheeler sales were growing rapidly, the fire incidents across almost all brands have created a fear in the mind of the customer, he stated.

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"This coupled with supply chain issues has decreased two-wheeler EV sales drastically from last month," Gulati said.

The commercial vehicle sales stood at 66,632 units last month, up from 17,607 units in May last year. It, however, remained low as compared to 75,238 units in May 2019.

Similarly, three-wheeler sales remained muted last month at 41,508 compared with 51,446 units in May 2019. In May last year, the retail sales stood at 5,215 units.

However, tractor sales were up last month at 52,487 units from 39,438 units in May 2019.

On the sales outlook, Gulati said while the Russia–Ukraine war continues to create a demand-supply mismatch thus delaying the availability of PVs, RBI has warned of more inflation as the increase in wholesale prices will get passed on to the end consumers. "This will result in a lower disposable income which will ultimately hamper auto sales."

Hence, FADA continues to remain cautious about any further recovery in auto sales in the near term, he noted.