The Federation of Automobile Dealers Associations (FADA) on Thursday said after the Russia-Ukraine tensions, the world is once again facing the threat of a Taiwan-China war due to which, the possibility of semiconductor shortage is once again looming. This, as chipmaker TSMC raises red flag on Taiwanese chip manufacturers being rendered non-operable if a war hits.

Additionally, the services sector Purchasing Manager’s Index (PMI) fell to a four-month low in July to 55.5, showing that the growth momentum has lost steam as a result of weaker sales growth and inflationary pressure in the previous month. Therefore, FADA remains cautiously optimistic as it enters the festival season.

Meanwhile, according to its monthly report, auto retail sales in July fell by 8 per cent year-on-year (y-o-y) to 14,36,927 units as against 15,59,106 units in July last year. The month is generally considered lean before festival season hits in August, said FADA.

PV, 2-w sales decline

Passenger vehicle (PV) sales also declined 5 per cent y-o-y to 2,50,972 units (2,63,238). “The PV segment is witnessing a dream run as retail sales are already higher than 2019. Even though there is a blip, the industry is continuously introducing new models, especially in the compact SUV segment. Along with this, a better supply in coming months will help bring down customer anxiety due to large waiting period,” said Vinkesh Gulati, President, FADA.

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Two-wheeler (2W) sales also declined 11 per cent y-o-y to 10,09,574 units in July (11,33,344 units). “The 2W retail run witnessed poor demand as rural India continued to underperform. This, coupled with high inflation, erratic monsoon and high cost of ownership, continues to keep bottom-of-the-pyramid customers at bay,” Gulati said.

Demand recovery

The three-wheeler (3W) space continued to see demand recovery even though full recovery to pre-Covid levels is still some time away. It is clearly evident that e-rickshaws are the biggest movers in the segment. “Demand recovery in 3W passenger category also shows that Covid is now behind us as passenger movement has once again started gaining traction,” he said.

Commercial vehicle (CV) retail figures continued to witness good demand as government’s infrastructure push is helping customers in concluding their purchase. Apart from this, the bus segment also witnessed the beginning of demand recovery as educational institutions and offices are once again back to the normal mode, he added.

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