June 2021 Auto Retail Sales Up 23% on Low Base
Moneylife Digital Team 08 July 2021
Total vehicle retail sales for June 2021 rose by 22.62% on a low base. However, when compared with June 2019, a regular pre-COVID month, retail sales are still down by 28%, says the Federation of Automobile Dealers Associations (FADA).
Vinkesh Gulati, president of FADA, says, "While all the categories were in green, passenger vehicles (PV) maintained good demand as customers continued to show keenness in vehicles for observing social distancing and safety of their families. The two-wheeler (2W) category, though in green, has witnessed a softer recovery as the rural market is taking time to get back from the post covid stress. The commercial vehicle (CV) segment has seen a staggering growth over the last year, though on a very low base as there were product shortages due to the Bharat stage (BS) emission standards (BS-6) transition."
"Overall, the industry is still not out of the woods. When compared to June 2019, we are still in the red by 28% with three wheelers (3W) and CVs taking the max hit as they are down by 70% and 45%, respectively. Only tractors continue to grow as it was up 27% compared to June 2019," he added.
June witnessed re-opening for most of the states except those in the south. Due to this, the industry witnessed a high pent-up demand, which was stuck in the system because of state-wide lock-downs.
Data shared by FADA shows that registration of 2W, 3W, PVs and CVs unrelentingly fell in June 2021 by 30%, 70%, 10% and 45%, respectively.
According to the apex body of automobile retail industry, continued global semi-conductor shortage is impacting demand – supply mis-match, thus restricting the growth of passenger vehicles. 
It says, "On the one hand, while the new virus mutants and a prediction of a third wave in August are affecting sentiments, the revival of monsoon in July after a pause of two weeks and a better vaccination drive rate continue to build some hope."
"We will therefore have to wait and watch how the overall economy shapes up over the next couple of months. We hence see demand to be a mixed bag and hope that recovery is back on track by the time Navratri and Diwali knock our door," FADA added.
As on end-May, dealer inventory days as PV and 2W inventory remained in the range of 30-35 and 20-25 days, respectively.
FADA also thanked the Union government for bringing entire auto retail industry under the micro, small and medium enterprises (MSME) category. "This will help the industry at a time when gears are down," Mr Gulati says.
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