Slow despatch pulls down passenger vehicle retail sales by 5% in July: FADA

Dragged down by two-wheelers, overall retail falls 8%

Registration or retail sales of passenger vehicles (PVs) fell 4.66 per cent year-on-year (YoY) in July, even as demand remains robust across the industry, said the Federation of Automobile Dealers Associations of India (FADA) on Thursday.

The lower retail of PVs — attributable to the delayed arrival of consignments from factories to distribution channels — is in sharp contrast to the wholesale despatch numbers.

PV despatches are estimated to have reached a record high of 342,300 units, advancing 16 per cent in the month gone by as chip woes eased, enabling manufacturers to ramp up demand, companies said on August 1.  

The same cannot be said of two-wheelers that continue to reel from the impact of incessant price hikes, inflationary trend, and poor demand in rural India.

Retail sales of scooters and motorcycles skid 11 per cent YoY during the month, dragging down aggregate retail sales by 8 per cent YoY, said a dealer body.  

The total registration (all segments) during the month dropped to 1,436,927 units, compared with 1,559,106 units in the corresponding month last year.

The overall retail also suffered as heavy rains in several parts of the country dissuaded buyers from making a purchase.

“For cars, the issue is still one of supply, not of demand. Had dealers got vehicles on time, they would have sold more,” said Vinkesh Gulati, president, FADA.   

Owing to semiconductor shortages, manufacturers tend to despatch more after the 15th of the month.  This month, the skew towards the second half of the month was greater. This led to a delay in the arrival of consignments at dealerships, explained Gulati.  

“The PV segment is witnessing a dream run as retail sales are already higher than 2019,” he said.

A raft of new model launches in the compact sport utility vehicle segment has kept up the momentum. An improving supply situation in the months to come will help in bringing down customer anxiety due to a long waiting period, said FADA.

“We urge all PV original equipment manufacturers to recalibrate their supplies, in line with market demand and avoid pushing low-moving stocks,” said Gulati.

The month gone by saw erratic monsoon — some states received less rainfall, others received more. The unfavourable weather resulted in decreased kharif sowing as the area under paddy dipped 13 per cent at the end of July, said FADA.

Tractor sales, which were showing good growth until a month ago, saw a steep contraction of 27 per cent YoY to 59,573 units in July.

After the Russia-Ukraine stand-off, the world is once again facing the threat of a Taiwan-China offensive. The threat of semiconductor shortage once again looms large as chipmaker Taiwan Semiconductor Manufacturing raises red flags. If war kicks in, Taiwanese chip manufacturers will be rendered ‘non-operable’, FADA said in a statement.

India’s services sector purchasing managers’ index fell to a four-month low in July to 55.5, showing that growth momentum lost steam as a result of weaker sales growth and inflationary pressure in the previous month.

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