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Robust June for auto sales: FADA bets on supplies as chip crunch eases, but inflation a worry

Vehicle dealers are betting on a revival in semiconductor supplies going forward, as June retail car sales captures the growing demand revival

July 05, 2022 / 11:38 AM IST
Representative image

Representative image

The month of June has been the turning point for the auto industry as it was marked by record rollouts in the sport utility vehicle (SUV) space.  This coincided with the global semiconductor supply shortage moderating, which resulted in vehicle production returning to near-normal levels. This in turn pushed up car sales, given that the chip shortage had led to long waiting times for would-be buyers.

Vehicle retail data released by the federation of automotive dealers - commonly referred to as FADA - reveals a strong YoY growth across all segments. Compared to last year, total retail sales for June has been higher by 27 per cent.  Also, passenger vehicle registrations saw Year-on-Year (YOY) growth of 40  per cent to 2,60,683 units in June 2022,  primarily due to ease in semiconductor availability. This segment saw registered sales of 1,85,998 units in June 2021.

Commenting on the performance, FADA President, Vinkesh Gulati noted “Auto Retail for the month of June’22 continued to show its positive run when compared YoY with June’21, a month which continued to face the brunt of Covid. The PV segment continued to see robust growth. An increase in wholesale clearly shows that semi-conductor availability is now getting easier. "  He also maintained, " Waiting period, especially in compact SUV and SUV segment continued to remain high. New vehicle launches are seeing robust booking thus reflecting healthy demand pipeline."

Two-wheeler sales clocked a growth rate of 20 per cent as against June last year, but the real YoY growth showed up in the demand for three-wheelers, which more-than-trebled in June.

"Poor market sentiment especially in rural India, high cost of ownership, inflationary pressure and June generally being a lean month due to rains kept 2W sales at low speed. In the 3W category, a major shift has happened in electric category. Apart from this, permit issues and frequent price increase remained the biggest dampeners," Gulati  added.


Also read: Delhi may hike taxi fares as CNG prices rise.

CV sales also grew up 89 per cent YoY in June, capturing the revival in economic activity, after a blip in February sales because of the Omicron outbreak.

"The CV segment showed strength for the first time as it grew by 4 per cent when compared to June’19, a pre-covid month. Bus segment along with LCVs are showing good traction, Gulati added.

FADA however fears that sustainably high fuel prices could impact disposable income of potential buyers, and thus resulting in lower demand in the entry-level PV and two-wheeler segments. The war in Ukraine has also added to the inflationary pressures, said FADA, noting that prices of essential items have increased.

When compared with June 2019, the total retail sales contracted by 9 per cent in June this year, but PVs and Tractor category clocked strong growth. The recovery has been encouraging, but yet to fully claw back to pre-covid levels.

Also Read: Industry bets on improved supply chain for two-wheelers.

Moneycontrol News
first published: Jul 5, 2022 09:37 am
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