India’s total vehicle registration in August stood at 1.18mn units, down by 26.81pc from the prior year, but up by 3.98pc from July, according to a report by the Federation of Automobile Dealers Associations (FADA).
Vehicle demand in India picked up in August as compared to the last five months due to Ganesh Chaturthi and Janmashtami festivals, and also due to relaxation of the coronavirus-induced lockdown across the country.
Entry-level passenger vehicles were in high demand as personal mobility was preferred because the pandemic is showing no signs of reduction, the association said.
Two-wheeler vehicle sales in August declined by 28.71pc to 898,775 units from last year but grew by 2.76pc as compared to July.
There was a significant drop in the sales of three-wheelers and commercial vehicles (CV) in August.
Three-wheeler sales plummeted by 69.51pc to 16,857 units from 55,293 units last year, while CV sales declined by 57.39pc to 26,536 units from 62,270 units in August 2019. However, the sales rose by 11.40pc and 37.54pc, respectively, when compared to July 2020.
Passenger vehicle (PV) sales decreased by 7.12pc to units 178,513 units in August from 192,189 units last August and rose by 13.43pc from July 2020.
Tractor sales stood at 67,406 units in August, up by 27.8pc from 52,744 units last year due to good rural economy, agriculture, and rainfall. As compared to July, the peak rainfall season, the sales declined by 11.54pc this month.
FADA said that no high-value transaction takes place in India during the 16 inauspicious days of the Shraadh period and the 30 days of Adhik Maas that fall in September. Hence, vehicle demand in September is expected to remain sluggish.
The association also said that the moratorium period from banks ended in August and hence if NPA’s are not too high and the recovery rate is even neutral to positive during this period, the banks and NBFC’s may return with aggressive financing schemes for auto loans, thus leading to a strong demand pullback.
While OEM’s are dispatching vehicles to dealers to stock-up inventory for the upcoming festival season, retail sales are still at 70-75pc levels despite the low base of last year.
FADA has advised extreme caution to all OEMs and dealers to avoid excessive inventory build-up that could lead to unmanageable interest cost which could further result in dealership closures.