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The retail sales data released by Fada is in line with December factory dispatch data released by individual automakers earlier this month. MINT
The retail sales data released by Fada is in line with December factory dispatch data released by individual automakers earlier this month. MINT

Retail sales of passenger vehicles grow 24% in Dec

  • A total of 271,249 units were sold in Dec, up from 218,775 a year earlier: Fada data

Retail sales of passenger vehicles rose 24% from the year earlier in December, boosted by a lower base and sustained demand after the festive season.

A total of 271,249 vehicles were sold in December, up from 218,775 a year earlier, showed data issued by the Federation of Automobile Dealers Associations (Fada) on Monday.

Sales also received a boost from advance purchases by some customers who chose to beat planned price hikes by automakers from January and because of the growing preference for personal mobility during the covid-19 pandemic.

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The industry body of dealers has, however, predicted that sales may weaken in January as some companies have raised vehicle prices and because the upbeat mood of the festive season is expected to wane.

The strong retail sales came despite a substantial reduction in discounts by companies because of depleted dealer inventory after decent retail sales during the recent festive season.

Traditionally, carmakers offer the highest discounts in December to liquidate dealer stocks before the new year kicks in.

Automakers also gained from a lower base as most of them cut production substantially last year because of falling demand and transition to the Bharat Stage-VI emission norms.

December retail sales, however, declined from the 291,001 units sold in November, which saw robust demand during the Diwali festival, though it improved from the 249,860 units sold in October.

In the two-wheeler segment, showroom sales of motorcycles and scooters jumped nearly 12% to more than 1.42 million units because of higher discounts by automakers and improved demand for executive segment or 125cc motorcycles. Retail sales also rose on a sequential basis from November’s 1.41 million units and October’s 1.04 million units.

The commercial vehicle market, however, continued to languish, with retail sales falling 13.5% from the year earlier in December to 51,454 units.

“December saw good spillover demand from the festive season and pre-buying because of anticipation of a price hike, but demand for vehicles in January looks to be bleak. The passenger vehicle segment may witness growth if the demand supply mismatch is resolved," Fada president Vinkesh Gulati said. “With the recent hikes announced by all original equipment manufacturers, Fada expects a temporary blip in demand as customers will take time to absorb this," he said.

The retail sales data released by Fada is in line with December wholesales, or factory dispatch data, released by individual automakers earlier this month. Sales at Maruti Suzuki Ltd increased 17.8% from the year earlier, while Hyundai recorded a 24.9% rise. Dispatches of two-wheelers by Hero MotoCorp and Bajaj Auto grew 3.16% and 4%, respectively in December.

The robust retail sale in December follows the faster-than-expected recovery in sales during Navratri and Diwali festivals in October and November, respectively. Passenger vehicle makers such as Maruti and Hyundai reported a more than 20% growth in retail sales during the 42-day festival period.

Retail sales of passenger vehicles grew 13% during the festive season from the year earlier to 431,597 units but that of two-wheelers fell 6.3% to 1.9 million units, according to data from Fada. Passenger vehicle makers recorded a growth in festive sales after two years.

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