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Retail sales of vehicles rose sharply in July on a sequential basis largely because of pent-up demand and greater preference for personal mobility to avoid infection and as dealerships reopened in most states.

Retail sales had plunged in April and May because of an explosive increase in covid cases that led to the closure of dealerships and factories.

Showroom sales of passenger vehicles (PVs) rose 42.14% to 261,744 units in July from 184,134 units in June, showed data issued by the Federation of Automobile Dealers Associations (Fada) on Monday.

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The auto industry was under stress from the first week of April when Maharashtra put in place strict lockdown measures. Delhi, Haryana, Karnataka and Tamil Nadu followed suit. Most automakers and suppliers of parts either stopped production or cut output sharply.

Some manufacturers such as Bajaj Auto Ltd, however, continued to operate with limited capacity to meet export orders. With a steady drop in infections, especially in north and south India, most firms had resumed operations from mid-May.

Vehicle sales are usually compared with those of the corresponding periods. However, during March and May 2020, automakers had to shut plants and showrooms due to a strict nationwide lockdown. Operations remained suspended till the first week of May and, in some cases, till early June.

Vinkesh Gulati, president, Fada, said most states except for some in the south eased covid-related curbs from June, which led to an increase in vehicle sales in July.

“While all categories (of automobile sales) were in the green, PVs maintained good demand as customers continued to show interest in vehicles for observing social distancing and for the safety of their families. The two-wheeler category, though in green, has witnessed a softer recovery as the rural market is taking time to recover from post-covid stress," he said.

Meanwhile, resumption of manufacturing and construction activity spurred a 46% jump in new commercial vehicle registrations at 52,130 units, though on a very low base. Decline in covid cases in rural markets and easing of curbs led to a 21.7% sequential rise in the retail sales of two-wheelers at 1.13 million units.

Retail sales are showing signs of recovery, but PV makers may find it tough to sustain the momentum because of disruption in production caused by a global shortage of semiconductor chips. Price increases by companies to offset higher commodity prices may also impact demand.

The retail sales data is in line with wholesales or factory dispatch data reported by automakers in July. Maruti Suzuki’s wholesales grew 9.83% sequentially to 136,500 units. Hyundai recorded a 18.63% rise to 48,042 units in July.

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