June auto sales up 10% YoY; PV and tractor sales at all-time high

On a month-on-month (MOM) basis, however, sales were down by 8 percent indicating a short-term deceleration, according to the FADA. Representation Image (Credit: Pixabay)

Automobile retail sales jumped 10 percent in June to 18.6 lakh units from the year-ago period on robust sales volumes across passenger vehicles (PVs), two-wheelers and tractors, data released by the Federation of Automobile Dealers Associations (FADA) on July 6 showed. The total auto sales in June 2022 stood at 17 lakh units.

Two-wheelers, three-wheelers, passenger vehicles, tractor and commercial vehicle segments saw a growth of 7 percent, 75 percent, 4.79 percent, 41 percent and 0.5 percent, respectively.

FADA president Manish Raj Singhania said the PV segment navigated a mixed landscape of variable demand, dynamic product portfolios and oscillating market sentiments.

“Despite some short-term contraction, India’s growth narrative remains resilient. June 2023 registered all-time highs for three-wheeler, passenger vehicle and tractor segments compared to the same period earlier,” he said.

“With dealers noting sporadic supplies of popular models and ageing product concerns of slow-moving variants, the segment still experienced an uptick in demand for new models, and anticipates rural sales to pick up pace in the coming days.”

Month-on-month (MoM), sales were, however,  down 8 percent, indicating a short-term deceleration, FADA said.

“Compared to pre-Covid levels, the overall auto retail has marked a marginal decrease of 3 percent, with the two-wheeler segment being the sole laggard. Meanwhile, the commercial vehicles segment experienced a 1.5 percent growth compared to June 2019, surpassing the pre-Covid levels for the first time,” the FADA president said.

PV sales stood at 2,95,299 units against 2,81,811 units sold in June 2022. The two-wheeler segment saw a 7 percent jump in sales at 13,10,186 units last month compared with 12,27,149 units in the same month last year.

Commenting on the two-wheeler sales, Singhania said the sector wrestled with supply constraints from certain original equipment manufacturers (OEMs) and a softer demand due to economic conditions and higher entry-level bike costs.

“New model introductions, festive promotions and seasonal factors couldn’t boost sales,” said Singhania. He also said there was a 12 percent MoM drop in two-wheeler sales with electric vehicle sales declining 56 percent from May primarily due to the government reducing FAME subsidies.

The three-wheelers segment saw a whopping 75 percent increase in sales to 86,511 units against 49,299 units a year ago. Tractor sales also jumped 45 percent YoY to 98,660 units, while there was a marginal rise in sales of commercial vehicles at 73,212 units from 72,894 in June 2022. CV sales also witnessed a marginal gain of 0.44 percent at 73,212 units vis-à-vis 72,894 units in the same month last year.

“The CV segment confronted mixed dynamics influenced by inconsistent demand, supply issues, government policies and external market factors. Despite fluctuating demand and vehicle availability issues, the government's infrastructural push and coal mining growth spurred demand for heavy commercial vehicles, counteracted by high-interest rates and rising prices,” said Singhania.

Outlook

FADA is cautious about the near-term business outlook for the sector and believes that an uneven monsoon season may reduce crop yields, shorten crop cycles and delay future crop arrivals.

“Such developments may affect the sales of automobiles, particularly in rural areas where a weak agricultural season could lead to a reduction in disposable income, thus affecting demand for two-wheelers and entry-level cars,” the FADA president said, adding “The upcoming rains may potentially boost agricultural prospects, revive rural demand and positively influence automotive sales. Hence, FADA remains cautiously optimistic for the near-term outlook.”