As India continues to open up, passenger vehicle (PV) registrations saw a year-on-year drop of 25 percent to 1,57,373 units in July 2020, as per the data shared by the Federation of Automobile Dealers Association (FADA) based on VAHAN.
Total vehicle registration numbers at regional transport offices (RTOs), which are a proxy for sales, fell by 36 percent at 11,42,633 units over July last year as the industry continues to battle the pandemic, according to a report of the dealer’s lobby.
The month of July saw better registrations compared to June. However, current market conditions are still not indicative of the actual demand situation on an all India level and retails continue to de-grow in a huge double digit despite the low base of last year, FADA informed.
With the historic month of zero sales in April and partial resumption of operations in the month of May and June, these vehicle registration numbers for July 2020 arrive amidst the pandemic when the country has crossed over the 2-million mark.
Ashish Harsharaj Kale, President, FADA said, “Banks and NBFCs though flush with high liquidity are still having a cautious approach towards funding auto retail affecting the demand revival especially in segments of CV, 3W and 2W. Vehicle funding percentage has fallen by 10-15 percent in many segments increasing the initial contribution beyond reach of many customers, despite having the intent to buy.”
He further noted, “Rural market continues to show strong growth as the monsoon continues its good spell. Tractor, small commercial vehicles and motorcycle sales positively impacted with the monsoon progress and spread.”
The dealers' lobby also announced that this month onwards, it will be releasing OEM wise market share for all the categories of vehicle and will give deeper analytics on the auto retail industry, through FADA Institute of Marketing and Research.
Barring the tractor segment, all other segments remain in red.
The decrease in retail sales was the highest for three-wheelers and commercial vehicles segments witnessing a year-on-year decline of 74 and 72 percent respectively in July 2020.
Two-wheelers, on the other hand, reported a drop of 37 percent at 8,74,638 units this month, down from 13,98,702 units in the same month last year.
Talking about the outlook for the next month, FADA President said, “August brings with itself the beginning of the long festival season. With Onam and Ganesh Chaturthi in the next few days, FADA hopes that the auto industry will start its recovery journey in a linear manner. Extreme caution is required by OEMs towards wholesale billing being in tune with retail sales to avoid dealer inventory build-up, Ashish Kale noted.”
He further added, “With retail sales still at 60-70 percent levels Y-o-Y despite the low base of last year, dealers are battling on many fronts to navigate through this unprecedented crisis and disproportionate inventory. The excessive interest cost could further put many on the border of business survival. The full year outlook continues to remain negative with a projected de-growth in retail sales in the range of 15-35 percent across various segments except tractors which looks set to clock a positive annual growth.”
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