EVs drive retail vehicle sales: FADA

CHENNAI: Electric Vehicles (EVs) made impressive strides this month, contributing to 8 per cent of the total vehicle retail, as per the vehicle retail data for May 2023, released by The Federation of Automobile Dealers Associations (FADA) on Monday.

This was buoyed by a surge in 2W EV sales that contributed 7 per cent and 3W EV sales contributing a substantial 56 per cent of their respective total sales. The commercial vehicles (CV) and passenger vehicles (PV) categories also marked their presence in the EV landscape, with respective contributions of 0.5 per cent and 2.5 per cent.

Manish Raj Singhania, president, FADA, said “May has been an encouraging month for the auto retail industry, demonstrating a robust 10 per cent YoY growth across all vehicle categories. We have witnessed a resurgence in the 2W, 3W, PV, Tractor, and CV segments with growth rates of 9 per cent, 79 per cent, 4 per cent, 10 per cent, and 7 per cent respectively. While there has been a slight -2 per cent decline compared to pre-COVID levels, the overall retail figures have shown improvement. The 2W and CV sales did continue to face some challenges, recording high single digit setback of -8 per cent and -7 per cent respectively.

The 2W sales were positively influenced by seasonal factors like the marriage season, changes in the FAME subsidies effective from June, and the recovery of rural demand, which hint towards a promising future in the aftermath of the COVID-19 pandemic.

In the passenger vehicle segment, the improved availability of vehicles, the strength of pending orders, and the robust demand for new launches drove a positive momentum, helping the segment rebound after a slump in the previous month.

The commercial vehicle segment experienced sustained growth, underpinned by the government’s focus on infrastructure development. The bus segment displayed a notable increase, driven by improved financing options and higher sales in academic institutions.

As we move forward, we remain committed to our customers and will continue to navigate these dynamic times, providing them with the best products and services that cater to their ever evolving needs and preferences.”

The auto retail sector faces diverse challenges across the 2W, CV and PV segments. For 2W, seasonal factors could boost demand, but concerns like weather-induced walk-in reductions, inventory, and regulatory norms persist. The CV sector anticipates improved vehicle availability but concerns about real driving emission norms and seasonal effects may impact sales. The PV sector expects increased demand, particularly for new models, Compact and full-sized SUVs and EVs, but inventory pressure and right model availability could pose challenges.

FADA advocates for a balanced auto retail ecosystem, urging collective action to regulate inventory levels, negotiate lower interest rates and support 2W Dealers by eliminating illegal multi-brand outlet sales. While acknowledging near-term challenges, FADA maintains a stance of cautious optimism, highlighting the potential for growth through collaborative efforts and alignment with market trends.

The anticipated stable interest rates by RBI’s Monetary Policy Committee could maintain vehicle demand and positively impact auto sales. But, supply chain issues, demand-supply dynamics, and regulatory changes also play a role in shaping the auto retail outlook.