Vehicle registrations grow in strong double-digits in November

According to data available with vehicle retailers body Federation of Automobile Dealers’ Association (FADA) sales of vehicles rose across categories in November. Overall, registrations went up by 25.71% to 2,380,465 units. Sales were marginally higher by 1.52% compared with the pre-covid month of October 2019, when 1,966,464 vehicles were sold in the country.

FADA President Manish Raj Singhania said, last month the industry recorded its highest-ever auto retails (with the exception of March 2020 when retails were higher due to transition to BS VI emission norms) with the onset of the marriage season sustaining demand post the festivals. About 1.4 million weddings are estimated to take place in the country between Nov 14 and Dec 14, 2022.

All the categories were in green with two-wheelers, three-wheelers, commercial vehicles, passenger vehicles and tractors growing by 23.61%, 80.34%, 32.80%, 21.31% and 56.81% respectively”, said he.
The federation has compiled the numbers from the vehicle registration data available on the road transport and highways ministry’s Vahan dashboard. Though the numbers are incomplete as some regional transport offices are still not linked to the Vahan portal, these are seen as a good proxy for the trend in the automobile retail market as manufacturers only disclose their dispatches from factories.

Demand for two-wheelers grew by a robust 24% last month but fell marginally by 0.9%, when compared to Nov’19, a pre-covid year. “This segment is slowly turning the tides from negative to positive as the same can be witnessed from retail sales due to the ongoing wedding season”, said Singhania. Average inventory in the channel stands at 30-35 days.

Three-wheelers emerged as the highest growing category in the period under review with passenger movement picking up as fear of covid weakens in consumers’ minds. Sales in the commercial vehicle segment too shot up by a third on back of the government’s continued focus in the infrastructure space and new mining projects. Replacement demand poured in along with healthy inter-state passenger movement boosting sales of buses.

In the passenger vehicle segment, better availability of vehicles, new launches and increase in rural demand kept sales healthy.

Singhania informed, the RBI’s latest Consumer Confidence Data suggests that buoyancy among customers is on a recovery path on account of better perceptions on general economic situation, employment, and householdincome. This, along with the ongoing festive season, has continued to help in bringing customers to the showrooms.

“For Bharat, normally after the harvest starts, farmers get money in hand and this starts the spending cycle. We expect spending for auto sales to go up once the harvest comes into the market and farmers start getting money in their hands”, said Singhania.

Impending price hikes by automakers, discounts on slow-moving models are expected to help year-end sales to remain healthy.

Singhania, however, cautioned, while the above actions are positive, RBI Thursday increased the repo-rate by 35 bps (225 bps increase since May’22) and continues to hint at more hikes in future. This increase now brings the repo rate to 6.25%, the highest since Feb’19. This will further lead to a higher cost of borrowing apart from the price hikes done by OEMs and may dent the consumer confidence specially in 2W and entry level PV segment”, said he.

Along with this, the recent covid-induced lockdowns in China lockdown may slow supplies of semi-conductors, which can act as a speed-breaker and add to supply-demand mismatch which has been improving the last few months.