Vehicle registrations in June increase 23% on last year's low base

As compared to June 2019, total registrations dropped 29 per cent

Vehicle registration across all the categories rose 22.62 per cent in June on last years’ low base, Federation of Automobile Dealers Association (FADA) said on Thursday. However, compared with June 2019, total registration dropped 29 per cent.

During the month, as many as 1,217,151 units were registered against 992,610 units in the same month last year. The numbers however, are not comparable, as June 2020 was the first month after the national lockdown. Vinkesh Gulati, President, FADA said that the current month (July) is seeing a good traction in terms of inquiries and bookings of passenger vehicles.

“On an average, there has been a 20 per cent jump in bookings of passenger vehicles in the first week of July compared to June.  If the trend continues and there’s no third wave, we will not only surpass the July 2020 numbers but also get past the July 2019 mark,” said Gulati.

The month saw re-opening for most of the states except the ones in the South. Due to this, the industry witnessed a high pent up demand which was stuck in the system because of statewide lockdowns.

The apex body for auto retailers expects the positive momentum from June carry forward to continue. It said that the global semiconductor shortage is weighing on demand. The supply mismatch due to dearth of chips is restricting the growth of passenger vehicles. “Had it not been for the semiconductor shortage, the growth would have been higher by 20 per cent,” said Gulati.

On one hand, while the new virus mutants and a prediction of a third wave in August are affecting sentiments, the revival of monsoons in July after a pause of two weeks and a better vaccination drive rate continues to build some hope. The industry will have to wait and watch how the overall economy shapes up over the next couple of months. FADA expects demand to be a mixed bag and hopes the recovery to be back on track by the time festive season kicks in.

According to Mitul Shah, head of research at Reliance Securities, the lower retail numbers (as compared to June 2019) also indicate inventory built up as wholesale volume was higher in the month. “Covid second wave led disruptions and local lock down has impacted retail sales to some extent in the month, while towards the end of the month retail sales started witnessing remarkable improvements,” he said.

Tractor continues to show better traction with healthy growth. Economic situation started witnessing some improvement since the beginning of June 2021. “We expect strong bounce back from Q2FY22 onwards on the back of favourable monsoon and healthy agri output.” He expects the M&HCV segment to outperform within the automobile industry. Ashok Leyland, Tata Motors and Bharat Forge remain the brokerage’s top BUY idea.

Among all the categories, the demand for PVs, which is being fuelled by strong preference for personal mobility, has been the most robust. Two-wheelers, though in the green, have had a softer recovery as the rural market is taking time to recover from the Covid stress. The commercial vehicle segment has seen staggering growth over last year, though on a very low base, as there were product shortages due to BS-VI transition.

When compared to June 2019, the industry as a whole is still not out of the woods, as overall demand has shrunk by 28 per cent, with three-wheelers and commercial vehicles taking the biggest hit. The two segments are down by 70 per cent and 45 per cent respectively. Only tractors continue to grow as it was up 27 per cent compared to June 2019.