Automotive retail sales up by 16 percent in July

The Federation of Automobile Dealers Associations (FADA) has released its monthly vehicle registration data for July 2020. The overall automotive retail sales in July (2W, 3W, PVs, CVs and tractors) stood at 11,42,633 units, which marks a 16 percent improvement on the preceding month. However, the sales are still 36 percent lower compared to the same period last year.

• FADA says rural market continues to show strong growth

• Vehicle registration-based market share released for first time

• Retail sales are still at 60-70 percent compared to same period last year

Rural market continues to grow

According to FADA’s retail sales numbers for the previous months, rural India seems to be the growth engine. Commenting on the sales data, Ashish Harsharaj Kale, president, FADA said, “As India continues to open up, the month of July saw better registrations compared to June, though on a YoY basis auto sector recovery is yet to be seen anywhere near normal. Current market conditions are still not indicative of the actual demand situation on an all India level and retails continue to de-grow in huge double-digit despite the low base of last year. Rural market though continues to show strong growth as monsoon continues its good spell. Tractor, small commercial vehicles and motorcycle sales positively impacted with the monsoon progress and spread.”

Vehicle registration-based manufacturer market share released by FADA

Bringing further transparency in auto retails, FADA Institute of Automobile Marketing & Research has, for the first time, released the various carmakers’ market share based on vehicle registration. The auto retail body says this will not only shift market share calculation from wholesale to actual retails, which is the global practise, but will also bring further clarity in carmaker-wise inventory at dealerships. In addition, it will also help all the stakeholders – suppliers, carmakers, banks/NBFCs and dealers get real-time demand status thus helping them in better planning. 

“FADA Institute of Automobile Marketing & Research will now be regularly bringing in deeper analysis on various aspects of Auto Retail in India. In times to come, it will also bring OEM wise market share at State Level thus bringing in more transparency,” added Kale.

Festive season optimism

Kale further states that with no further lockdowns expected, especially in auto manufacturing hubs, the outlook for the month is positive in comparison to July. In addition, the month of August which also marks the beginning of long festival season. “With Onam and Ganesh Chaturthi in next few days, FADA hopes that Auto Industry will start its recovery journey in a linear manner.”  

On the other hand, FADA states that extreme caution is required by manufacturers towards “wholesale billing being in tune with retail sales, to avoid dealer inventory build-up.”

FADA says retail sales are still at just 60-70 percent levels compared to same period last year, despite the low base of last year. This has led to dealers 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.

For the full-year outlook, FADA continues to remain negative, with a projected de-growth in retail sales in the range of 15-35 percent across various segments, except tractors, which looks set to clock a positive annual growth.

Also see:

Rural market demand drives two-wheeler sales in July

June 2020 passenger vehicle sales improve over previous month

Two-wheeler sales down 27 percent in June 2020