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Retail auto sales in July dip 36%, scupper hopes of recovery

Sumant Banerji     August 10, 2020

Retail sales of automobiles witnessed a steep 36 per cent decline in July over last year, dampening hopes of a robust recovery that were raised after companies declared their dispatch figures on August 1.

Figures collated by Federation of Automobile Dealers Association showed passenger vehicle sales were down over 25 per cent last month at 157,373 units. This was nearly 40,000 units lower than what companies dispatched from factories to dealerships during the month indicating a build up of stocks happening at the front end. Sales of two-wheelers were also down nearly 37.5 per cent at 874,638 units, which were almost 80,000 units less than dispatches.

"As India continues to open up, the month of July saw better registrations compared to June, though on a YoY basis Auto Sector recovery is yet to be seen anywhere near normal. Current market conditions are still not indicative of the actual demand situation on an all India level and retails continue to de-grow in huge double digit despite the low base of last year," said Ashish Harsharaj Kale, president, FADA.

Commercial vehicles and three-wheeler that represent economic activity in the country were worst affected. Commercial vehicle sales were down 72.18 per cent at 19,293 units while three-wheeler that are used for last mile connectivity were lower by 74.33 per cent at 15,132 units. Unlike passenger vehicles and two-wheelers, the trends in these two categories were in line with what is being seen in factory dispatches.

The only bright spot was  tractors that witnessed a 37 per cent jump in sales at 76,197 units indicating good traction in agriculture and allied activities.

"Rural market though continues to show strong growth as monsoon continues its good spell. Tractor, small commercial vehicles and motorcycle sales positively impacted with the monsoon progress and spread," Kale said.

FADA has given a relatively positive outlook for this month compared to July as the onset of festive season with onam and ganesh Chaturthi this month is likely to impact sales positively. Kale was however unsure if and when sales would reach last year's levels, which were anyway much lower than the previous year.

"With a caveat of no further lockdowns, especially in auto manufacturing hubs, the outlook for the month is positive in comparison to July. August brings with itself the beginning of long festival season. With Onam and Ganesh Chaturthi in next few days, we hope the industry will start its recovery journey in a linear manner," he said. "With retail sales still at 60-70 per cent levels YoY despite the low base of last year, dealers are battling on many fronts to navigate through this unprecedented crisis and disproportionate inventory. The full year outlook continues to remain negative with a projected de-growth in retail sales in the range of 15-35 per cent across various segments except tractors which look set to clock a positive annual growth."

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