Auto sector loses festive momentum in December but car, SUV sales continue to rev up

Auto sales

by 5paisa Research Team Last Updated: Jan 09, 2023 - 03:50 pm 4.5k Views

The Indian automobile sector’s retail sales fell 5% in December over the year-ago period, after two months of festive season momentum that drove vehicle sales sharply higher.

Total vehicle sales declined to 16.22 lakh units in the last month of 2022 from 17.15 lakh in the same month of 2021, according to data collated by the Federation of Automobile Dealers Associations (FADA).

Except for two-wheeler sales, which fell by 11%, all the categories were in the green. Sales of three-wheelers, passenger vehicles, tractors and commercial vehicles grew by 42%, 8%, 5% and 11%, respectively.

However, when compared to the pre-Covid month of December 2019, total vehicle retail sales were down by 12%. Here also, except for two-wheelers, which fell by 21%, all the other categories like three-wheelers, passenger vehicles, tractors and commercial vehicles closed in the green by 4%, 21%, 27% and 9%, respectively.

For the calendar year 2022, total vehicle retail grew by 15% from 2021 and 17% when compared with 2020 but fell by 10% from the pre-Covid year of 2019.

The passenger vehicle category continued to break all records by clocking 34.31 lakh retail sales in 2022, thanks to high demand for SUVs. Similarly, the tractor category broke all records to close at 7.94 lakh vehicles in 2022.

“The two-wheeler segment once again failed to impress as retail sales during Dec 2022 continued to fall after two good months,” FADA President Manish Raj Singhania said.

Singhania said the rural market has yet to pick up fully due to the impact of inflation and the increased cost of ownership. While EV sales are rising, the traditional two-wheeler segment has yet to see any green shoots, he said.

According to FADA, the three-wheeler segment, which was completely down during Covid, has recovered well and has narrowed its gap when compared to 2019. Within the segment, the electric rickshaw sub-segment is showing triple-digit growth. This has pushed the EV market share above the 50% mark.

The commercial vehicle segment has continued to grow during 2022 and is now almost on a par with 2019 retail sales. With an uptick in demand for light CVs, heavy CVs, buses and construction equipment, the government’s continued push for infrastructure development has kept this segment going, FADA said.

FADA, however, was a little cautious in its near-term outlook. Global geopolitical headwinds, tightening monetary policy and the lingering effect of the pandemic has combined to create a gloomy global outlook, it said.

The industry group said that with BS-VI phase 2 norms kicking in shortly, vehicle price hikes may continue to affect sales during January-March. To counter this, automakers should announce special schemes so that retail sales momentum continues, it said. Also, for the auto industry to fully rise above pre-Covid levels, rural areas and the two-wheeler segment need to perform, it added.

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