Retail Auto Sales Slump 2.9% in March, FADA Reports Supply Disruptions and Rural Stress

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The disruption in the supply chain, as well as the distress in the rural economy, is likely to hamper the recovery of the automotive sector, which is only expected to see a strong recovery in the next financial year, said the Federation of Associations of car dealerships (FADA).

Overall retail sales in March fell 2.87% to 16,19,181 units, while full-year sales rose about 7% to 1,63,75,799, according to data from the FADA.

“The near-term outlook for the Indian auto industry continues to remain challenging as the ongoing Russian-Ukrainian war and the lockdown in China are expected to affect the supply of critical components…We expect sales volumes to increase [in] single digits for the current fiscal year,” FADA Chairman Vinkesh Gulati told reporters.

He added, however, that the federation expected the auto industry to come out of the woods and reach pre-pandemic highs by FY24.

Over the past fiscal year, passenger vehicle (PV) retail sales increased 14.2% to 27,26,047 units, while two-wheeler sales increased 3.81% to 1,19 73,415. “Crude is boiling so fuel prices have risen by around ₹10. This will continue to rise and hit sentiment further,” Gulati added.

He said that while the PV segment was likely to experience longer waiting periods due to supply chain disruptions, the two-wheeler segment – which is already a “non-performer” due to the rural distress – could see a further slowdown due to an increase in cost of vehicle ownership coupled with rising fuel prices.

“FADA remains extremely cautious about any recovery in sight until the end of the Russian-Ukrainian war and China’s lockdown,” Gulati said.

Over the past year, sales of commercial vehicles have increased by 45% to 6,52,125 units, while sales of three-wheelers have increased by 50.3% to 3,88,093 units.

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