Growth across vehicle segments powers 10% rise in India's June auto retail sales, cautiously optimistic for the near term: FADA

• Two-wheelers, three-wheelers, passenger vehicles, tractors and commercial vehicles sales grew 7 %, 75 %, 5 %, 41 %, and 0.5 % in June 2023.
  
• Two-wheeler market anticipates continued economic pressures and supply challenges, FADA said.
  
• The PV segment faces inventory pressures and demand-supply mismatches, but the upcoming festive season beginning end-August offers a hopeful outlook, FADA said.
  
• Delayed and uneven rains may affect the sales of automobiles in rural areas, FADA said, adding it remains cautiously optimistic for the near term.
  

Automobile retail sales in June registered 10 % year-on-year growth, with positive performances seen across all vehicle categories.

Data showed two-wheelers, three-wheelers, passenger vehicles, tractors and commercial vehicles sales grew 7 %, 75 %, 5 %, 41 %, and 0.5 %.

The Federation of Automobile Dealers Associations (FADA) today released retail sales data for June 2023.

"Two-wheeler market anticipates continued economic pressures and supply challenges, while the reduction in FAME subsidies casts a shadow over EV sales," FADA said.

The passenger vehicle segment faces inventory pressures and demand-supply mismatches, impacting profitability, but the anticipation of a boost from the upcoming festive season beginning end-August offers a hopeful outlook, FADA said.

Erratic monsoons in India raise concerns about yield and potentially impacting automobile sales, especially in rural areas, but the anticipation of evenly spread rains going forward may revive rural demand and thus positively influence retails.

"Despite a 10 % YoY growth, the Auto Retail sector has seen an 8 % MoM dip, indicating a short-term deceleration in sales," FADA president Manish Raj Singhania.

"In comparison to pre-Covid levels, the overall auto retail marked a marginal decrease of 3 %, with 2W as the sole laggard. Conversely, the CV segment experienced a 1.5 % growth compared to June'19, surpassing the pre-Covid levels for the first time," Singhania said.

Further, FADA said June 2023 witnessed the three-wheeler market's robust growth, primarily owing to the previous year's low base effect and positive market sentiment.

"The delayed and uneven rains may reduce crop yields, shorten crop cycles and cause a delay in future crop arrivals. Such developments may affect the sales of automobiles, particularly in rural areas where a weak agricultural season could lead to a reduction in disposable income, thus affecting demand for two-wheelers and entry-level cars."

However, upcoming rains may potentially boost agricultural prospects, revive rural demand, and positively influence automotive sales. FADA said it remains cautiously optimistic for the near term. (ANI)