Dealers’ Lobby Expects Retail Auto Sales To Surge On Festive Push
Vehicle registrations, a measure of retail auto sales, improved for the second straight month in July, FADA says.
Automobile dealers expect a spurt in sales as the festive season kicks off in August, further aiding the revival in retail shipments that has been driven by rural India in the last two months.
“With a caveat of no further lockdowns, especially in auto manufacturing hubs, the outlook for the month is positive in comparison to July,” Ashish Kale, president at the Federation of Automobile Dealers Associations, said in a media statement on Monday. “August brings with it the beginning of a long festival season. With Onam and Ganesh Chaturthi in the next few days, FADA hopes that the auto industry will start its recovery journey in a linear manner.”
Vehicle registrations, as measured by sales at dealerships, rose to 11,42,633 units in July from 9,84,395 units in June, according to data released by FADA. On a year-on-year basis, however, retail sales fell 36% in the reported month. All segments, barring tractors, witnessed a decline.
“As India continues to open up, July saw better registrations compared to June, though on a year-on-year basis auto sector recovery is yet to be seen anywhere near normal,” Kale said in the statement. “The rural market showed strong growth as the monsoon continues its good spell. Tractors, small commercial vehicles and motorcycle sales were positively impacted with the monsoon progress.”
India’s automakers have been trying to push sales since the Diwali in 2018. First, an increased upfront insurance cost, coupled with a broader consumption slowdown and disruptions caused by BS-VI emission norms, hurt sales. Then the recent nationwide lockdown to combat the Covid-19 pandemic completely stalled operations at companies and dealerships. The automakers had reported a complete washout in sales in April. But as the lockdown curbs are eased, retail sales picked up.
Still, the automakers’ lobby is somewhat cautious.
“Dealers are battling on many fronts to navigate through this unprecedented crisis and disproportionate inventory. The excessive interest cost could further put many on the border of business survival,” the statement said.
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The full-year outlook continues to remain negative with a projected contraction in retail sales in the range of 15%-35% across various segments, except tractors which looks set to clock an annual growth.