 "April auto retail sales drop of 4% on decline in two-wheeler demand")
Owing to a dip in customer demand in two-wheelers and pre-buying in March, the automobile retail sales in April saw a four per cent decline to 1.72 million units, down from 1.79 million units in April last year, said data shared by the Federation of Automobile Dealers Associations (FADA). This is likely to recover in May due to higher queries coming for the upcoming marriage season.
Although the three-wheeler segment enjoyed robust growth of 57 per cent year-on-year (YoY), tractor and commercial vehicles (CV) segments only grew by a modest one per cent and two per cent, respectively. Meanwhile, the two-wheeler and passenger vehicle categories experienced YoY degrowth of seven per cent and one per cent, respectively. Compared to the pre-Covid-19 April 2019, two-wheeler sales are still down by 19 per cent.
“The two-wheeler segment's continued low sales, with a seven per cent decrease, can be attributed to limited supplies due to the OBD 2A shift, untimely rains, and pre-buying in March. Model mix availability, rural sentiment, and demand in the two-wheeler motorcycle segment remain weak. The rural economy has yet to show significant progress,” said Manish Raj Singhania, president, FADA.
Following a high demand in the e-rickshaw and passenger segments, the three-wheeler segment has grown by 57 per cent YoY and also surpassing pre-coronavirus levels at a healthy rate. The passenger vehicle (PV) segment, which achieved record sales in FY23, slowed down in April, with retail decreasing by one per cent YoY. This was primarily due to last year's high base and the OBD 2A norms, which led to vehicle price increases and advanced purchases in March.
Although supplies are improving, there is a significant mismatch between customer demand and available inventory. Furthermore, entry-level PVs have fewer buyers, suggesting that customers at the bottom of the pyramid are still hesitant to upgrade from two-wheelers to four-wheelers. For the first time in eight months, the PV segment witnessed a YoY degrowth, potentially signalling a tapering demand in this segment.
The CV segment maintained positive momentum with a two per cent increase in retail sales. “Dealers reported that vehicle availability was a major concern due to the OBD 2A norms. The low base from last year also contributed to the positive growth," he said.
FADA has urged the Goods and Services Tax (GST) Council to consider reducing GST on two-wheelers from 28 per cent to 18 per cent to help revive this vital segment, which represents 75 per cent of total auto sales volume. “On the other hand, the upcoming marriage season in May is expected to bring about a sales resurgence, driven by an increase in customer inquiries. Additionally, as electric vehicles (EVs) gain popularity, customers are increasingly considering transitioning from internal combustion engines (ICE) to EVs, which may temporarily delay purchasing decisions,” he added.