The registration of passenger vehicles in June came down to 1,26,417 units, a decline of 38 per cent year-on-year (YoY) as compared with 2,05,011 units in June 2019.

Similarly, two-wheelers registration also declined by 41 per cent YoY to 7,90,118 units during the month as against 13,37,462 units in June 2019, the Federation of Automobile Dealers Associations (FADA) said on Tuesday.

In the commercial vehicles segment, the registration came down by 84 per cent YoY to 10,509 units in June (64,976 units).

The three-wheeler registrations also declined by 75 per cent YoY to 11,993 units last month (48,804 units).

Tractor sales up

However, tractor sales grew by 11 per cent YoY to 45,358 units in June against 40,913 units in June 2019.

But, decline of all other categories led to fall in total registration to 9,84,395 units, a decline of 42 per cent as against 16,97,166 units in June 2019.

“Unlock 1.0 coupled with increase in demand from the rural market has boosted the retail sales with respect to the May month’s numbers. June registrations, although better than May are still not indicative of the actual demand situation as lockdown woes continue in some parts and supply side is far from its complete potential,” said Ashish Harsharaj Kale, President, FADA.

Grim outlook

Therefore, the annual outlook currently continues to be grim with projected sales to witness a contraction in the range of 15-35 per cent across various segments in 2020-21, except for the tractor segment, which looks set to clock a positive annual growth.

FADA said the overall auto demand continues to be subdued coupled with supply side constraints as well as constraints in retail lending from NBFCs. Normalcy in demand still seems quite distant and is not likely before the festive season.

Overall weak economic sentiments coupled with rising number of Covid-19 cases has led to weak consumer confidence especially in Tier–1 cities, as customers still have fears over community spread and a likely return of complete lockdown, the industry body said.

Rural surge

However, the rural market, led by a robust harvest and timely arrival of monsoon has witnessed demand recovery in comparison to urban areas, resulting in a surge in retail sales of tractors as well as two-wheelers and small commercial vehicles.

In the current month also, assuming there is no further lockdown and the unlocking of the economy continues, vehicle registrations are expected to see similar trends and will be better than the June numbers, with green shoots emerging in newer geographies and segments, it said.

The positive rural sentiment, backed with demand boosting measures by the government, can ensure the quickest return to normalcy of the auto industry, among all core industries, thereby impacting the overall consumer sentiment positively, it added.

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