Federation of Automobile Dealers Associations (FADA) released the latest data that reflects a 10 percent year-on-year (YoY) growth in May in auto retail sales in India.
The sales burgeoned across categories: Two-wheelers (2W) sales ballooned 9 percent while three-wheelers (3W) swelled to 79 percent. During the same time, Passenger vehicles (PV) and commercial vehicles (CV) sales grew 4 percent and 7 percent, respectively. Tractor trade expanded by 4 percent.
“May has been an encouraging month for the auto retail industry, demonstrating a robust 10 percent YoY growth across all vehicle categories. We have witnessed a resurgence in the 2W, 3W, PV, Tractor, and CV segments with growth rates of 9 percent, 79 percent, 4 percent, 10 percent, and 7 percent respectively.”
“ While there has been a slight -2 percent decline compared to pre-Covid levels, the overall retail figures have shown improvement,” Manish Raj Singhania, FADA President, said.
Notably, the May figures for electric vehicles paint the picture of EV adoption amongst consumers. Electric Vehicles (EVs) constituted 8 percent of total sales, with two-wheelers representing 7 percent, three-wheelers adding 56 percent, commercial vehicles contributing 0.5 percent, and passenger vehicles adding 2.5 percent each.
“Electric Vehicles (EVs) made impressive strides this month, contributing to 8 percent of the total vehicle retail. This was buoyed by a surge in two-wheelers EV sales that contributed 7 percent and three-wheelers EV sales contributing a substantial 56 percent of their respective total sales.
The CV and PV categories also marked their presence in the EV landscape, with respective contributions of 0.5 percent and 2.5 percent,” Singhania further said.
The auto retail sector is marred with challenges across the 2W, CV, and PV segments, according to FADA. Seasonal factors add to the demand for 2W, but concerns related to weather-induced walk-in reductions, inventory, and regulatory norms inhibit the growth. The CV sector may have vehicle availability, but constraints like RDE norms and seasonal effects restrict the growth.
Inventory pressure and right model availability are the roadblocks in the PV sector, which otherwise expects increased demand, specifically for new models, compact and full-sized SUVs, and EVs.
“The anticipated stable interest rates by RBI’s Monetary Policy Committee could maintain vehicle demand and positively impact auto sales. However, supply chain issues, demand-supply dynamics, and regulatory changes also play a role in shaping the auto retail outlook,” FADA said.