Auto retail sales touch 1.86 million in June, 10% more than last year: FADA

Automobile retail sales in June recorded a 10 per cent increase year-on-year to 1.86 million units compared to 1.7 million units during the month last year, according to data released by the Federation of Automobile Dealers’ Associations (FADA) on Thursday. However, the sector witnessed an 8 per cent dip in month-on-month sales, indicating short-term deceleration.

All categories posted a y-o-y growth in June: two-wheelers by 7 per cent, three-wheelers by 75 per cent, passenger vehicles (PV) by 5 per cent, tractors by 41 per cent and commercial vehicles (CV) by 0.44 per cent.

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

During the month of June 2023, two-wheeler sales saw a 7 per cent increase, to 1.31 million units compared to 1.22 million units a year ago. According to FADA, the two-wheeler sector wrestled with supply constraints from some original equipment manufacturers and softer demand due to economic conditions and higher entry-level bike costs.

“New model introductions, festive promotions and seasonal factors couldn’t markedly boost sales. A 12 per cent MoM drop was observed in two-wheeler sales, with electric vehicle sales witnessing a 56 per cent MoM decline, primarily due to the government reducing FAME subsidies, triggering extreme price hikes,” said a FADA statement.

Three-wheelers were the major gainer in June 2023, with a 75 per cent increase to 86,511 units as against 49,299 units a year ago. A major reason for this is the previous year’s low base effect and positive market sentiment. The shift towards alternative fuels, predominantly electric vehicles (EVs), continues to play a significant role in driving this growth, despite potential supply concerns due to non-availability of OBD2 vehicles, FADA said.

In June, passenger vehicles saw a 5 per cent increase in sales to 295,299 units against 281,811 units in June 2022. The PV segment navigated through a mixed landscape characterised by variable demand, dynamic product portfolios and oscillating market sentiments.

FADA indicated that Maruti’s swift action to facilitate the clearance of slow-moving model stockpiles by underwriting dealer interest costs contributed positively to the segment. Despite dealers noting sporadic supplies of popular models and aging product concerns of slow-moving variants, the segment experienced an uptick in demand for new models, and it anticipates rural sales to gather further pace, it added.

Another major gainer during the month was the tractor segment, which posted a 41 per cent increase in sales to 98,660 units compared to 69,952 units a year ago. During the same period, commercial vehicle sales posted only a marginal increase of 0.44 per cent to 73,212 units.

“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,” FADA said.