Auto retail outlook heralds mixed trends in July while the two-wheeler (2W) market has picked up despite facing continued supply challenges and economic pressures, Federation of Automobile Dealers Associations (FADA) said on Thursday.

On the rural front, upcoming rain and their potential impact on agricultural output may sustain the upward trend that has been witnessed in the two-wheeler segment. The two-wheeler sales grew by around 7 per cent y-o-y to 13,10,186 units during the month against 12,27,149 units in June 2022. The 3W sales grew the highest by 75.48 per cent y-o-y to 86,511 units in June (49,299 units). Similarly, the tractor sales grew by 41 per cent y-o-y to 98,660 units during the month (69,952 units).

However, the industry is still anxious about monsoon being erratic and hindering crop sowing. It may affect the sales of automobiles, particularly in rural areas where a weak agricultural season could lead to a reduction in disposable income, thus affecting demand for two-wheelers and entry-level cars, FADA said.

“Yet, upcoming rains may potentially boost agricultural prospects, revive rural demand, and positively influence automotive sales. FADA hence remains cautiously optimistic for near term outlook,” Manish Raj Singhania, President, FADA, said.

Meanwhile, the cutback in Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) subsidies cast a shadow over electric vehicle (EV) sales, he said adding that conversely, the three-wheeler (3W) market predicts growth, underpinned by favourable market responses and rising demand.

“The passenger vehicle (PV) segment faces a dichotomy of factors. While the launch of new models and potential rise in rural sales lend optimism, dealers navigate inventory pressures from original equipment manufacturers (OEMs) and demand-supply mismatches, impacting profitability,” Singhania said.

Hopeful outlook

However, the anticipation of a boost from the upcoming festive season in end-August offers a hopeful outlook. The commercial vehicle (CV) sector contends with a balance of positive market sentiment and potential monsoon impacts, with demand spurred by infrastructural projects and improved financing options, he said while sharing the monthly retail data of automobile sales in the domestic market.

According to the FADA’s monthly retail sales data, the PV sales grew by around 5 per cent year-on-year (YoY) to 2,95,299 units in June as compared with 2,81,811 units in the corresponding month last year.

The CV retail sales grew marginally (0.44 per cent) to 73,212 units last month as compared with 72,894 units in June 2022, the FADA data showed.

The grand total of all categories grew by 9.57 per cent YoY to 18,63,868 units in June as compared with 17,01,105 units in corresponding month last year.

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