Auto sales yet to catch speed as early festivals and good monsoons fail to offer expected cheer: FADA

Total vehicle sales in August grew 8 percent compared to the same month last financial year, according to data released by the Federation of Automobile Dealers Associations (FADA) on Thursday, September 8. However, this is still 7 percent lower than pre-COVID August 2019.

“August opens the door for festival season to kick in. While dealers anticipated good Ganesh Chaturthi sales, the results thus far have not been encouraging. Despite good monsoons, the festive season began with a dampener during Ganpati,” FADA President Manish Raj Singhania said.

According to the FADA report, passenger vehicles outperformed by growing 41 percent from the pre-pandemic August, and commercial vehicles turned positive by adding 6 percent. However, other segments were in red, with two-wheelers, three-wheelers, and tractors falling by 16 percent, 1 percent, and 7 percent, respectively.

However, as semi-conductor supply continues to ease, the report said that the auto retail and passenger vehicles (PV) segment is especially geared up to have the best festive season in a decade.

While two-wheeler sales dipped compared to the pre-pandemic period, year-on-year, the segment saw 8.5 percent growth compared to August 2021. It is not up to 2019 levels due to price hikes, which took it out of reach for most entry-level customers, and erratic monsoon, following which crop realisation has been low and flood-like situation has restricted customer movement, the report claims.

PV sales saw 6.5 percent YoY growth in August as demand for all subcategories of vehicles except entry level remained strong, the report said. "This is also aided by new feature-rich launches which OEMs have been doing since last few months,” Singhania said, adding that even as easing semi-conductor shortage has improved vehicle availability, waiting period remains due to high demand in higher feature-rich variants.

On the other hand, the CV segment grew 24 percent YoY, given the government’s infrastructure push, new launches by OEMs, and better fleet operations conversion.

Three-wheelers witnessed double-digit growth of 83 percent YoY and equals 2019 sales for the first time. “Electrification is also the highest in this category as e-Rickshaw leading the way. 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,” FADA president said.

FADA report pointed out that while September itself Onam and Navratri, it also brings the 15-day period of Shraadh, which is generally considered an inauspicious period for buying vehicles.

"With the easing of supply, the PV segment will definitely see the best festivities (Navratri and Diwali) in the last decade. Along with this, if vehicle prices continue to remain stable and there are no more health-related threats, we may see an uptick in the much awaited 2W space, which has not shown the required growth since last festivals," Singhania said in the FADA statement.