Despite rising 10% in January, two-wheeler sales still 13% below pre-pandemic level

The Federation of Automobile Dealers Associations (FADA), on Monday, stated that the total vehicle retail for January 2023 grew 14 percent year-on-year (YoY) but was still down by 8 percent when compared to the pre-Covid month of January 2020. Total sales across categories last month rose to 18,26,669 units, as compared to 16,08,505 units in January 2022.

Manish Raj Singhania, President of FADA, in a statement said that all categories were in the green as the two-wheeler, three-wheeler, passenger vehicle (PV), tractor and commercial vehicle (CV) segments saw 10 percent, 59 percent, 22 percent, 8 percent and 16 percent rise in volumes in January 2023, respectively on YoY basis.

The apex body revealed that while the two-wheeler segment showed growth on a YoY basis, it fell by 13 percent compared to the pre-pandemic level of January 2020. Two-wheeler retails rose to 12,65,069 units last month, as against 11,49,351 units in January 2022, an increase of 10 per cent.

According to the FADA, while sentiments are improving at a snail’s pace and are better than what it was a year ago, the rural market is yet to fully come to the party as the cost of ownership has shot up significantly while disposable income has not increased in the same ratio.

FADA added that, per the Economic Survey 2022-23, rural wages would rise at a steady positive rate as inflation is expected to soften, thus translating into a rise in real wages. The agency hopes this would have a rub-off effect with the rise in two-wheeler sales.

The agency also highlighted that the recently made announcements in Budget 2023-24 would also help the overall growth of automobile retail. the demand for entry-level two-wheelers and entry-level PVs is likely to accelerate due to enhanced income tax rebates, Budget allocation for vehicle scrappage policy and import duty exemption for manufacturing lithium batteries.

FADA said the three-wheeler segment had seen 60 percent growth YoY, 101 percent growth when compared to 2021, fueled largely by the EV fame-2 subsidy along with the demand from commercial 3W space. Three-wheeler retail sales rose to 65,796 units, up 59 per cent from 41,487 units in January last year.

The passenger vehicle category continues to see robust growth of 22 percent YoY, 10 percent from January 2021 and 8 percent from the pre-covid month of January 2020. Passenger vehicle registrations rose to 3,40,220 units last month, an increase of 22 per cent as compared to 2,79,050 units in the year-ago period.

The national body of the automobile retail industry explains that this was because of good enquiry, healthy bookings and improved supplies in the segment. It further added that while the waiting period for some models has come down, compact SUVs, SUVs and luxury vehicles continue to witness minimum waiting of 2-3 months.

Both tractor and commercial vehicles continue to grow above the pre-pandemic levels of January 2020 by growing 9.5 percent and 6 percent respectively. Commercial vehicle registrations were at 82,428 units in January, up 16 per cent from 70,853 units in the year-ago period.

On the other hand, tractor sales rose by 8 per cent to 73,156 units last month, as against 67,764 units in January last year. Continued demand in the market due to the replacement of fleet, growth in freight availability and the government’s consistent push for infrastructure projects has helped the CV segment rise above pre-covid numbers, revealed FADA.

Singhania added, “On the global front, China’s re-opening will help better the supply chain, thus improving the supply of vehicles and reducing the vehicle waiting period. Budget 2023-24 will aid overall growth of automobile retails in times to come.”

“Apart from this, the capital outlay of Rs 10 lakh crore for infrastructure spending will help aid CV sales which are already witnessing an upswing,” FADA said.