July vehicle registrations fall 8% as rains, inflation hurt demand: FADA

Two-wheeler, tractor sales contract as people put off making expensive purchases before festival season in August

Vehicle registrations in July dipped 8 per cent year-on-year as heavy rains in parts of the country dissuaded new purchases, said the Federation of Automobile Dealers Associations  (FADA) on Thursday.

July is a lean month before the festival season in August. Compared to July 2019, the overall fall this time was a sharp 20 per cent, the dealer body said.

Total registrations (in all segments of vehicles) in July dropped to 14, 36,927 units compared to 15, 59,106 units in the corresponding month last year.

Overall volumes in July were dragged down by two-wheelers, which fell 11 per cent year-on-year to 10,09,574 units due to poor demand in rural India. Sales in urban markets suffered as inflation, erratic monsoon and high cost of ownership discouraged those at the bottom of the pyramid.

“The PV [passenger vehicle] segment is witnessing a dream run as retail sales are already higher than 2019,” said Vinkesh Gulati, president of FADA, in a statement.

The SUV segment softened in July, but new model launches in the compact category kept up the momentum. An improving supply situation in coming months will help in bringing down customer anxiety due to the large waiting period, FADA said.

“We also urge all PV OEMs (original equipment manufacturers) to recalibrate their supplies as per the market demand and avoid pushing low moving stocks,” said Gulati.

Some states got less rainfall and others more than required in July. The unfavourable weather resulted in decreased kharif sowing as area under paddy dipped by 13 per cent at the end of July, FADA said.

Tractor sales, which were showing good growth till June, contracted 27 per cent year-on-year to 59,573 units in July.

After the Russia- Ukraine war, the world is watching China’s military exercises around Taiwan’s waters. Chipmaker TSMC has warned that that if there is war, Taiwanese chip manufacturers would be rendered "non- operable", FADA said in the statement.

India’s services sector PMI (purchasing manager’s index) fell to a 4-month low in July to 55.5, indicating that economic growth slowed as result of weaker sales and inflationary pressure in the previous month.

 FADA said it overall remains cautiously optimistic as it enters the festival season.