According to the Federation of Automobile Dealers Associations (FADA), retail sales of automobiles in India rose 37% last month to 16,27,975 units, helped by the low year-on-year base due to lockdowns during the second wave of COVID-19.
Noting that retail sales have yet to recover from the “tremors of COVID”, the association added that the RBI’s move to raise the benchmark interest rate by 40 basis points caught everyone by surprise and would further dampen sentiment since Car loans would get expensive. However, the federation has changed its stance from “extremely cautious” to “cautious” on expecting a modest recovery in the near future.
While FADA added that the war between Russia and Ukraine and the lockdown in China would continue to cause demand-supply mismatches, it said private consumption is picking up again, supported by a recovering contact-intensive services industry and increasing discretionary spending ahead of the upcoming wedding season. In addition, the monsoon is forecast to be normal, and if evenly distributed, would have a positive impact on rural sentiment and benefit tractor and two-wheeler sales.
According to data from FADA, passenger car registrations rose 25% year-on-year last month to 2,64,342 units. Two-wheeler sales rose 38% to 11,94,520 units, while commercial vehicle sales rose 52% to 78,398 units. Tricycle sales increased 96% and tractor registrations increased 26%.
“While year-to-year comparison to April 2021 shows all categories in green with high growth rate, it is important to note that both April 2021 and April 2020 were impacted by the nationwide lockdown due to phases one and two of the COVID wave, in which resulted in a no-negligible deal,” said FADA President Vinkesh Gulati, adding that a better comparison would be with April 2019.
“April 2022 compared to April 2019 shows we’re still not out of the woods as overall retail is down 6%,” he said.