Auto retail sales grow 37% in April on low Covid-hit base effect

Automobile retail sales in India increased by 37 per cent in April on a low base of COVID-hit April last year, automobile dealers' body FADA said on Thursday.

Total sales across categories rose to 16,27,975 units in April, as compared to 11,87,771 units in the year-ago period.

On a year-on-year basis, all vehicle categories including passenger vehicles and two-wheelers were up as compared with April last year.

Passenger vehicles registrations stood at 2,64,342 units last month, up 25 per cent from 2,10,682 units in April last year.

Similarly, two-wheeler sales were at 11,94,520 units, up 38 per cent from the year-ago period.

Commercial vehicle retails stood at 78,398 units in April, up 52 per cent from 51,515 units in April 2021.

Three-wheeler sales were up 96 per cent, while tractor registrations were up 26 per cent as compared with April last year.

"While Y-o-Y comparison with April 2021 shows all categories in green with high growth rate, it is important to note that both April 2021 and April 2020 were affected by nation-wide lockdown due to phase one and two of the COVID wave, which witnessed no-to-negligible business," Federation of Automobile Dealers Association (FADA) President Vinkesh Gulati noted.

Hence a better comparison will be with April 2019, which was a normal pre-COVID month, he added.

"April 2022 when compared with April 2019, reveals that we are still not out of the woods as overall retails were down by 6 per cent," Gulati stated.

He noted that with the Russia–Ukraine war continuing and China under lockdown, the auto industry continues to witness supply crunch with semiconductor shortage and high metal prices and container shortage impacting the sector.

The two-wheeler segment, which has witnessed slight increase in sales, when compared to last month, is extremely sensitive to price hikes and continues to remain below pre-COVID levels, Gulati said.

"It is a clear sign that Bharat has not been keeping up with India. Apart from rural distress, multiple price hikes coupled with high fuel prices are keeping price-sensitive entry-level two-wheeler customers away," he added.

The commercial vehicle segment after a long downturn, which began post the announcement of axle load norms in 2018, is now witnessing demand recovery as all sub categories continue to inch north, Gulati said.

On business outlook, Gulati said the Russia–Ukraine conflict and China lockdown will continue to create demand-supply mis-match thus delaying the availability of passenger vehicles.

"This coupled with RBI's out-of-turn announcement of increasing repo-rate by 40 bps has taken everyone off-guard. The move will curb excess liquidity in the system and will make auto loans expensive. While the PV segment may be able to absorb this shock due to long waiting periods, the two-wheeler segment is already reeling due to an underperforming rural market, vehicle price hikes and high fuel costs," he stated.

High interest rates on vehicle loans will be an additional blow for the auto segment and would certainly slow down sales and dampen the sentiments further, Gulati said.

Elaborating on the positive factors, he noted that private consumption is regaining traction.

"Also, Skymet has come out with its normal monsoon forecast. If the same is evenly distributed, it will have a positive rub-off on rural sentiment as farmers will be able to get better crop realisation thus increasing their disposable income," Gulati said.

This along with the marriage season in coming days will also see a traction in auto retail, he noted.

FADA, which represents over 15,000 automobile dealers having 26,500 dealerships, said it gathered registration data from 1,429 out of 1,613 RTOs in the country.