Auto retail still feeling Covid jitters, fuel price cut may boost sales: FADA

The Federation of Automobile Dealers Associations (FADA) has released data pertaining to vehicle retail in the month of May underlining that while there was a positive movement, the Indian automotive industry is still under-performing when compared to figures from pre-Covid pandemic times of 2019. While last month saw vehicle retails substantially rising, this is only in comparison to the May months of 2021 and 2020 when lockdown restrictions had been in place to check the spread of the pandemic.

Noting how comparing figures from May of this year with those of the same month in 2021 and 2020 won't be a true representation of data because of lockdown rules in past two years, FADA did however highlight that vehicle retail last month was still down by 10 per cent when compared to May of 2019. Sales of passenger vehicles and tractors are looking up but two-wheelers, three-wheelers and commercial vehicles remain a concern.

All India Vehicle Retail Data - May, 2022
	May 2022	May 2021
2W	12,22,994	4,10,871
3W	41,508	5,215
PV	2,63,152	86,479
Tractor	52,487	16,623
CV	66,632	17,607

Factors such as chip shortage which is also being fueled by the ongoing Russia-Ukraine conflict continue to hurt manufacturing processes while FADA also points to Reserve Bank of India (RBI) warning of more inflation as a threat to sales. But there has been some positive movement as well. “The government made a bold decision to cut excise duty on fuel prices thus reducing inflation and economic distress. While this will have a positive rub-off on sale of vehicles especially 2W, the increase in 3rd party insurance premium will act as a deterrent for some," said Vinkesh Gulati, President of FADA. “The PV segment which has already surpassed May’19 numbers is witnessing huge demand. Dealers are not be able to fulfill the same due to supply side issues."

At present, waiting period for some very popular car models in the country is anywhere between three months to as long as two years. FADA notes that there is a degree of customer frustration with long waiting periods.