car sales: Vehicle sales remain under pressure in March

Auto retail sales remained under pressure last month due to weak consumer sentiment in rural markets, insufficient availability of semiconductors, high fuel prices and a sharp rise in costs acquisition of vehicles over the past two years.

Vehicle registrations with regional transport offices (RTOs) fell 3% to 1,619,181 in March, led by lower sales of two-wheelers, passenger vehicles and tractors. Indian car manufacturers do not disclose retail sales figures and therefore registration numbers are used as an approximation.

“The two-wheeler segment, which was already underperforming due to rural distress, saw further decline due to the rising cost of vehicle ownership coupled with rising fuel costs” , said Vinkesh Gulati, president of the Federation of Automobile Dealers Associations (FADA). ), a lobby for vehicle retailers.

Two-wheeler registrations for the month under review fell by 4.02% to 1,157,681 units. The cost of acquiring two-wheelers has increased by more than 20% over the past two years, which has weighed on demand.

Although demand remained strong in the passenger vehicle segment, the global shortage of semiconductors continued to affect supplies. Passenger vehicle registrations last month fell 4.87% to 271,358 units. Gulati warned that the Russian invasion of Ukraine and covid-induced lockdowns in China could further disrupt supplies, lengthening the waiting period for car buyers.

The data was collated by FADA from the Ministry of Road Transport and Highways (MoRTH) VAHAN platform. VAHAN captures data from 1,391 of the country’s 1,600 RTOs.

In the commercial vehicle segment, demand for three-wheelers and trucks and buses grew strongly. With the opening of schools and offices, demand for three-wheelers increased by 26.61% to 48,284 units in March. At the same time, commercial vehicle sales increased by 14.91% to 77,938 units. “CVs continue to move forward even though full recovery from the FY2020 outlook is still a long way off. Sentiment for the segment remains positive as the government infrastructure push coupled with replacement demand drives sales,” Gulati said.

For the full year, car registrations rose 7%, FADA said. Demand increased in all segments, albeit from a low base, with the exception of tractors.

In the short term, Gulati said challenges will persist for local auto industry stakeholders. The Russian-Ukrainian conflict and blockages in China are expected to disrupt supplies. In addition, the sharp rise in fuel prices should dampen demand. “Crude is boiling and as a result fuel prices have risen by around Rs 10. This will continue to rise and hit sentiment further, reducing spending. At the same time, rising raw material costs have caused OEMs to raise prices for their vehicles. Although no drop in demand has been observed in the PV segment, it will certainly impact the 2W segment which is an extremely price-sensitive market,” he said.

On the positive side, with Gudi Padwa, the wedding season and the reopening of educational establishments and offices, pent-up demand is expected to arrive, especially in the two-wheeler segment. FADA expects the local auto industry to reach pre-pandemic levels in the next fiscal year (FY24).