Auto retail sales in June 2023 showed a 10% YoY growth, exhibiting positive performances across all vehicle categories including 2-wheelers, 3-wheelers, passenger vehicles, tractors, and commercial vehicles growing at 7%, 75%, 5%, 41%, and 0.5%, respectively, according to the latest monthly vehicle retail data released by FADA (Federation of Automobile Dealers Association (FADA).

The overall sales for the month stood at 18,63,868, up 9.57% against 17,01,105 units sold across dealerships in the same period last year. However, on a month-on-month basis, the auto retail sector saw an 8% decline in sales. As compared to the pre-Covid levels, the overall sales are still down 3%.

FADA says despite a slight decline as compared to pre-COVID levels, the overall retail figures relatively improved in the month, except for two-wheelers sales, which dipped 14%. The two-wheeler segment, being the primary segment, continued to experience setbacks. For the first time, commercial vehicles came out of the effect of Covid and grew by 1.5% when compared to June 2019.

On the industry's performance, FADA chief Manish Raj Singhania says: "Despite a 10% YoY growth, the auto retail sector has seen an 8% MoM dip, indicating a short-term deceleration in sales. Analysing individual categories on a YoY basis, 2W, 3W, PV, Tractor and CV segments observed growth rates of 7%, 75%, 5%, 41% and 0.5% respectively. In comparison to pre-COVID levels, the overall auto retail marked a marginal decrease of 3%, with 2W as the sole laggard. Conversely, the CV segment experienced a 1.5% growth compared to June'19, surpassing the pre-COVID levels for the first time."

June 2023 also recorded multiple segment all-time highs as three-wheelers, PVs, and tractors showed maximum strength when compared to previous June’s, the FADA data shows.

In the three-wheeler segment, the month saw robust growth, primarily owing to the previous year's low base effect and positive market sentiment. "The shift towards alternative fuels, predominantly EVs, continues to play a significant role in driving this growth, despite potential supply concerns due to non-availability of OBD2 vehicles."

The passenger vehicle segment navigated through a mixed landscape, says FADA, adding that it was characterised by variable demand, dynamic product portfolios, and oscillating market sentiments. "FADA commends Maruti's swift action to facilitate the clearance of slow-moving model stockpiles by underwriting dealer interest costs, contributing positively to the segment. With dealers noting sporadic supplies of popular models and aging product concerns of slow-moving variants, the segment still experienced an uptick in demand for new models and anticipates rural sales to pick up further pace."

The commercial vehicle segment also saw "mixed dynamics" influenced by inconsistent demand, supply issues, government policies, and external market factors.

In its near-term outlook, FADA says July 2023's auto retail outlook has signaled "mixed trends". The two-wheeler market could see "continued supply challenges and economic pressures", despite new schemes and expectations of monsoon-boosted sentiment, says FADA. Also, the cutback in FAME subsidies "casts a shadow over EV sales", the industry thinks, adding the three-wheeler market could, however, see growth, supported by favourable market responses and rising demand.

The PV segment, FADA says, faces a "dichotomy of factors". "While the launch of new models and a potential rise in rural sales lend optimism, dealers navigate inventory pressures from OEMs and demand-supply mismatches, impacting profitability.”

However, the anticipation of a boost from the upcoming festive season in end-August offers a hopeful outlook, the industry body thinks.

On the agricultural front, erratic monsoon rainfall in India is hindering crop sowing, says FADA, adding the delayed and uneven rains could affect the sales of automobiles, particularly two-wheelers and entry-level cars.

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