Retail Auto Sales Fall 8% In July 2022 As Two-Wheelers Remain Under Pressure

Sales of automobiles at dealerships fell over the year earlier, mainly dragged by two-wheelers.

India’s retail auto sales declined 8% year-on-year in July 2022, according to the Federation of Automobile Dealers Associations. When compared with July 2019, a pre-pandemic month, total vehicle retails fell 20%.

“July is generally considered as a lean month before festival season hits in August,” the dealers’ lobby said in a statement on Thursday.

Two-wheeler sales, which contributed more than 70% to the total sales, fell 11% over the year earlier to 10.1 lakh units in July, FADA’s data showed.

“The two-wheeler retail run witnessed poor demand as rural India continues to underperform,” FADA President Vinkesh Gulati said in the release. “This coupled with high inflation, erratic monsoon and high cost of ownership continues to keep bottom of the pyramid customers at bay.”

Compared to the pre-pandemic period of July 2019, two-wheeler sales were 28% lower.

Passenger vehicle sales fell 4.7% to 250,972 units in July. But the segment is well-placed to perform better in the coming months as demand remains strong, the association said.

“The PV segment is witnessing a dream run as retail sales are already higher than 2019. Even though there is a blip in July numbers, the industry is continuously introducing new models, especially in compact SUV segment,” Gulati said. “Along with this, a better supply in coming months will help in bringing down customer anxiety due to large waiting period. We also urge all PV OEMs to recalibrate their supplies as per the market demand and avoid pushing low-moving stocks.”

Due to the lower Kharif sowing on account of an erratic monsoon in July, the sales of tractors declined 27% year-on-year.

The commercial vehicle category witnessed higher demand in July as sales rose 27% to 66,459 units. According to FADA, the government’s push on infrastructure continues to support sales of commercial vehicles. “Apart from this, the bus segment is also witnessed beginning of demand recovery as educational institutions and offices are once again back to normal mode.”

Commercial vehicle sales, however, are still 4% lower compared to the pre-Covid level.

Outlook

After the Russia-Ukraine war, the world is once again facing the threat of Taiwan-China war, the statement read. “Due to this, the threat of semiconductor shortage is once again looming as chip-maker TSMC (Taiwan Semiconductor Manufacturing Co.) raises red flag that if war hits, Taiwanese chip manufacturers would be rendered ‘non- operable’.”

FADA, however, remains “cautiously optimistic” as it enters the festival season.