Economy

Russia–Ukraine war, China lockdown continue to create demand-supply mismatch, says auto dealers’ body

BL New Delhi Bureau | | Updated on: May 05, 2022

FADA has said high interest rates for vehicle loan will be an additional blow for the segment

The Russia–Ukraine war and lockdowns in China will continue to create demand-supply mismatch thus delaying the availability of passenger vehicles (PVs) in the country, Federation of Automobile Dealers Associations (FADA) said on Thursday adding that RBI’s off-cycle repo rate hike by 45 bps has taken everyone off-guard.

While PV segment may be able to absorb this shock due to long waiting periods, two-wheeler (2W) segment is already reeling due to underperforming rural market, vehicle price hikes and high fuel costs, the association said.

High interest rates for vehicle loan will be an additional blow for this segment. Certainly, this move will slowdown the speed of auto retail and dampen the sentiments further, it added.

“On the other hand, private consumption is regaining traction backed by a recuperating contact-intensive services and rising discretionary spending. Also, Skymet has come out with its normal monsoon forecast. It will thus benefit tractor and 2W sales. This along with marriage season in coming days will also see a traction in auto retail,” FADA said.

April retail sales

Meanwhile, in its monthly retail sales report, FADA said the PV sales in April grew by more than 25 per cent year-on-year (YoY) to 2,64,342 units as compared with 2,10,682 units in corresponding month last year.

The 2W segment also grew by 38 per cent YoY to 11,94,520 units during the month as against 8,65,628 units in April 2021. Similarly, commercial vehicle (CV) sales grew 52 per cent YoY to 78,398 units last month as compared with 51,515 units in same month last year.

The three-wheeler (3W) retail sales grew the highest (96 per cent) in the yearly comparison to 42,396 units in April as against 21,640 units in April 2021. Tractor sales grew by 26 per cent YoY to 48,319 units during the month as compared with 38,306 units in corresponding month last year.

Overall, the retail sales grew by 37 per cent YoY across categories to 16,27,975 units during the month as compared with 11,87,771 units in April last year.

“The month of April saw similar auto retail figures as March. While YoY comparison with April 2021 shows all categories in green with high growth rate, it is important to note that both April 2021 and April 2020 were affected by nation-wide lockdown due to phase 1 and 2 of the Covid wave which witnessed no to negligible business,” Vinkesh Gulati, President, FADA, said.

Hence, a better comparison will be with April 2019 which was a normal pre-Covid month, he said.

“April 2022 when compared with April 2019 reveals that we are still not out of the woods as overall retails were down by 6 per cent. Apart from PV and tractors, which grew handsomely by 12 per cent and 30 per cent, respectively, 2W, 3W and CV are yet to turn green as these categories were down by 11 per cent, 13 per cent and 0.5 per cent, respectively,” Gulati added.

Published on May 05, 2022
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