Vehicle sales up 8% in Aug, two-wheelers cause for concern: FADA

Tractor sales decline 32% despite good monsoons; three-wheelers do modestly compared to 2019

India’s retail vehicle sales across categories were up 8.31 per cent year-on-year in August, said the Federation of Automobile Dealers Association (FADA) on Thursday as it flagged business "not being encouraging" at the start of festivals.

Two-wheeler sales were up 8.5 per cent and three-wheeler by 8.3 per cent in August. Passenger and commercial vehicle sales increased 6.5 per cent and 24 per cent. Tractor sales declined 32 per cent.

“Auto Retail for the month of August 2022 saw an overall growth of 8 per cent. August opens the door for festival season to kick in. While Dealers anticipated good Ganesh Chaturthi in August, the results thus far have not been encouraging. In spite of good monsoons, the festive season began with a dampener during Ganpati,” said Manish Raj Singhania, FADA’s president.

When compared with August 2019 and before the coronavirus, total vehicle retail sales fell by 7.45 per cent. Passenger vehicles grew 41 per cent; commercial vehicles also turned positive by growing 6 per cent with respect to August 2019. All the other segments were in the red with two-wheelers, three-wheelers and tractors falling by 16 per cent, 1 per cent and 7 per cent.

The continuing cause of concern is the two-wheeler segment, which is affected by the rising cost of ownership and prices. While two-wheeler sales were down by 16 per cent compared to August 2019, they increased 9 per cent on a year-on-year. “We have seen the cost of acquisition of two wheeler bikes going up. Similarly, operating cost, including fuel prices matter a lot to the buyer. Similar effect was seen on entry-level cars also,” Singhania said.

While the two-wheeler segment has grown by 8.5 per cent year on year, it continues to face from the effects of Covid-19 and it is still not above 2019 levels, FADA statement said. This coupled with price hikes has made a two-wheeler out of reach for most entry-level customers. With erratic monsoon, the crop realisation has been low and flood like situation has restricted customer movement.

The three-wheeler space has now equalled 2019 sales of over 56,000 units for the first time. Electrification is the highest in this category with e-rickshaws leading the trend. There is a clear indication that customers are now preferring electric vehicles over ICE vehicles as ICE 3W continues to see double digit de-growth when compared to pre-Covid levels.

The commercial vehicle segment continues to witness an upswing in economic activities post monsoon and saw a growth of 24 per cent year on year. “This along with the government's infrastructure push, new launches by OEMs and better conversion in fleet operations has kept the segment in the green. Apart from this, the Passenger Carrier segment is also showing good demand due to increased buying from Educational Institutions,” the statement said.