Vehicle sales rise by 14.48 per cent YoY in August

Total production in August 2021 was 1.38 million units compared to the 1.20 million units that the industry recorded in the same month last year

All India vehicle retail sales rose by 14.48 per cent year on year at 1.38 million units in August 2021. This is compared to the 1.20 million units that the industry recorded in the same month last year. However, it is down 14.75 per cent (1.62 million) from the pre-Covid month of August 2019.

With OEMs drastically cutting down productions due to unavailability of semiconductors, shortage of containers and high metal prices, customers for the first time may not get a vehicle of their choice and lucrative schemes during this festive season. Ultra-frequent price increase is also keeping entry-level buyers at bay.

Customers, especially at the bottom of the pyramid, are shifting their priority from saving instead of spending. This will hence keep demand for two-wheelers a concern. Though, with Educational Institutions slowly opening up, a ray of hope can be seen for an improved demand in two-wheeler category in the coming months.

FADA thus sees that the near-term outlook will continue to remain a mixed bag with PVs witnessing demand-supply mismatch and 2W facing a demand crunch.

On a year-on-year basis, all categories were in the green with 2W up by 6.66 per cent, 3W up by 79.70 per cent, PV up by 38.71 per cent, tractor up by 5.50 per cent and CV up by 97.94 per cent.

Both tractors as well as PVs continue to see robust demand as they grew by 35.98 per cent and 31.67 per cent when compared to August 2019, a pre-covid month.

FADA President, Vinkesh Gulati said: “Auto dealers are facing the most challenging phase of their business career as Covid-19 after-effect continues to play spoilsport. While until last year, when demand was a challenge, supply is becoming a bigger problem currently due to shortage of semiconductors, even though there is high demand for passenger vehicles.

“Every dealer by now starts planning for a bigger offtake in anticipation of a bumper festive but due to supply issues, inventory levels are at lowest levels during this Financial Year.

“The 2W market is highly price sensitive. With multiple price hikes, increased fuel cost coupled with Educational Institutions remaining closed, the impact could be felt on the overall segment. Customers continued to fight financial battle due to Covid related health issues and hence remained away from dealerships resulting in low enquiry and lower sales. This has its impact on the entry level segment which continues to face the biggest brunt.

“The CV segment continues to witness some recovery coming back majorly due to low base of last year. While SCVs had already shown good recovery due to intra-city goods movement, M&HCVs are picking up pace only in specific geographies where the Government is rolling out infrastructure projects. Acquisition cost post BS-VI implementation along with financers keeping away from the segment and high fuel cost continues to restrict recovery in CV demand,” he added.

Inventory at the end of July 2021:

Average inventory for PVs ranges from 25-30 days

Average inventory for 2W ranges from 20-25 days