Total vehicle sales for the month of June 2021 have risen by 22.62% year-on-year (y-o-y) on a low base, according to data released by the Federation of Automobile Dealers Associations (FADA). However, when compared to June 2019, which was a regular pre-COVID month, retail sales are still down by 28.32%.
The FADA data showed that on a year-on-year basis, all categories registered an uptick in numbers with passenger vehicle sales up by 43%, two-wheelers up by 17%, three-wheelers up by 22%.
“June witnessed 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,” said FADA President Vinkesh Gulati.
While all the categories were in the green, passenger vehicles continued to see good demand as customers showed keenness to purchase vehicles keeping physical distance and family safety in mind. The Two-wheeler category has witnessed a softer recovery, as the rural market is taking time to get back from post-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-6 transition, FADA said.
However, the auto industry is still not out of the woods yet because compared to June 2019, FADA said that it is still down by 28%with three-wheelers and commercial vehicles taking the maximum hit, contracting by 70% and 45%, respectively.
FADA said that continued global semiconductor shortage is impacting demand-supply mismatch thus restricting the growth of passenger vehicles. On one hand, while the new virus mutants and a prediction of third COVID-19 wave in August are affecting sentiments, the revival of monsoon in July after a pause of two weeks and a better vaccination drive rate continue to offer hope, it added.
As far as the near-term outlook is concerned, FADA expects positive momentum from June to carry forward to July. With south India opening up, there is likely to be a further pickup in demand. However, in the longer term, the auto industry is yet to see retail numbers comparable to FY19, FADA added.
FADA said it is thankful to the government for bringing the auto sector under the ambit of MSME, as this will help auto dealers through lower cost of financing and lower utility rates.