Vehicle retail sales grew 8.31% year-on-year in August 2022 ahead of the upcoming festive season, according to data released by the Federation of Automobile Dealers Associations (FADA).

When compared with August 2019, a pre-Covid-19 month, total vehicle retail sales fell 7%. While passenger vehicles outperformed handsomely by growing 41%, commercial vehicles also turned positive by growing 6%, thereby coming out of the Covid-19 blues. All the other segments were in the red with two-wheelers, three-wheelers and tractor sales falling by 16%, 1% and 7%, respectively.

While dealers anticipated good Ganesh Chaturthi sales in August, the result thus far has not been encouraging, says FADA president, Manish Raj Singhania. "In spite of good monsoons, the festive season began with a dampener during Ganpati," he says.

Passenger vehicle sales rose 6.51% year-on-year to 2,74,448 units in August. "The PV segment continues to be on a bull run as demand for all subcategories of vehicles except entry level remained strong. This is also aided by new feature-rich launches which OEMs are doing since the last few months," says FADA.

With semi-conductor shortage slowly becoming a passe, vehicle availability has definitely improved but the waiting period continues to remain due to high demand in higher feature-rich variants, it adds.

While the two-wheeler segment grew 8.5% year-on-year, it continues to face Covid-19 blues due to weak demand in rural India and is still not above 2019 levels, the auto dealers' association says. This coupled with price hikes has made two-wheelers out of reach for most entry-level customers. With erratic monsoon, the crop realisation has been low and a flood-like situation has restricted customer movement, says FADA.

The commercial vehicle segment continues to witness an upswing with improvement in economic activity. CV sales grew 24% year-on-year to 67,158 units. The government's infrastructure push, new launches by OEMs and better conversion in fleet operations have kept the segment in green. Apart from this, the passenger carrier segment is also showing good demand due to increased buying from educational institutions.

Auto retail sales in the three-wheeler segment grew 83% year-on-year, reaching the 2019 sales level for the first time. Electrification is also the highest in this category with three-wheeler e-rickshaws leading the way, says FADA, adding that there is a clear indication that customers are now preferring electric vehicles over ICE vehicles as ICE three-wheelers continue to see double-digit de-growth when compared to pre-Covid-19-levels.

In its near-term outlook, FADA says while the month of September brings with it Onam and Navratri, it also brings the 15-day period of Shraadh, generally considered an inauspicious period for buying vehicles.

"With easing of supply, the PV segment will definitely see the best ever festivities (Navratri and Diwali) in the last decade. Along with this, if vehicle prices continue to remain stable and there are no more health-related threats, we may see an uptick in the much awaited 2W space which has not shown the required growth since last festivals," says FADA.

FADA also changed its stance from "cautiously optimistic" to "optimistic" ahead of the festive period.

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