Auto retail sale in the country fell 27 per cent in August, according to the Monthly Vehicle Registration Data released by the Federation of Automobile Dealers Associations (FADA) on Wednesday.
However, vehicle registrations for August show improvement due to ongoing festivities when compared month on month, but still down by 26.81 per cent on year on year basis.
On yearly comparison, two-wheeler shrunk by 28.71 per cent, three and two-wheelers by 69.51 per cent, commercial vehicles by 57.39 per cent and passenger vehicles by 7.12 per cent while tractor registration continued its upward journey registering 27.80 per cent growth.
Entry-level passenger vehicles showed initial signs of demand revival as customers sitting on fence finally concluded their purchase with Janmashtami and Ganesh Chaturthi during the month. Overall demand is not back to pre-Corona levels as, despite abundant liquidity, a risk-averse mood of banks and NBFCs coupled with stricter CIBIL scores fails to capture demand in the current month.
The FADA awaits the government’s reduction on GST for two-wheelers and roll out of incentive-based scrappage policy, thus re-igniting demand and once again making auto a lead indicator of growth.
Commenting on last month performance of the auto sector, FADA President Vinkesh Gulati said that August saw good numbers when compared to previous months this year. August also saw an arrest in decline and pullback efforts on all fronts were visible, though, on year on year, all categories except tractors continued to fall.
After five months, passenger vehicles saw a decline reducing to a single digit. Entry-level passenger vehicles were in high demand as personal mobility is being preferred with current pandemic showing no signs of reduction.
For the first time, urban centres showed initial signs of demand pullback. With the government’s priority in spending towards rural development and agriculture, coupled with good monsoon and a healthy sowing season, tractor, small commercial vehicles and entry-level passenger vehicles positively impacted August sales.
However, commercial vehicles, especially the M&HCV category, are still suffering from higher lead times with financers and an increase in the cost of acquisition leading to viability issues. A stricter CIBIL score is also affecting customer finance.