Home >Companies >News >Rural, semi-urban demand propels vehicle sales in July
Sales in the domestic market had plunged in the March-May period due to the stringent lockdown measures imposed. (Mint)
Sales in the domestic market had plunged in the March-May period due to the stringent lockdown measures imposed. (Mint)

Rural, semi-urban demand propels vehicle sales in July

  • A good summer crop, healthy monsoon, fewer infections in such areas helped sales growth
  • Overall, vehicle sales during July declined by 36.27% year-on-year to 1,142,633 units

NEW DELHI : Retail sales of passenger vehicles and two-wheelers saw steady sequential growth in July, as demand for entry-level cars and motorcycles continued to rise in the rural economy. A good summer crop, healthy monsoon and fewer covid-19 infections in rural and semi-urban areas contributed to the sharp turnaround in sales.

However, year-on-year (y-o-y), showroom sales of passenger vehicles in India declined by 25.19% to 157,373 units during the month due to covid-19-induced disruptions, showed data released by Federation of Automobile Dealers Associations (FADA) on Monday.

Retail sales improved sequentially from 126,417 units in June following increased demand in rural and semi-urban markets, and a shift in customer preference for personal transport to avoid infection. A similar trend was witnessed in the two-wheeler and tractor segments as well.

Sales in the domestic market had plunged in the March-May period due to the stringent lockdown measures imposed to contain the spread of the covid-19 pandemic.

As retail sales picked up following the easing of the nationwide lockdown in May, most manufacturers are trying to ramp up production to meet demand. However, a surge in covid-19 cases and lack of availability of manpower have limited the ability of automakers to increase production.

Intermittent lockdowns announced in certain states have also affected production and retail sales. Overall, vehicle sales during July declined by 36.27% y-o-y to 1,142,633 units.

Maruti Suzuki India Ltd’s retails during the months fell 20% y-o-y to 79,315 units, while Hyundai’s declined by 23.71% to 29,413 units, according to FADA. Maruti witnessed a market share gain of 316 basis points (bps) to 50.42%, while Hyundai reported a marginal gain of 36bps to 18.69%, it showed.

Interestingly, Tata Motors increased market share by 203bps to 8.10% with the sale of 12,753 vehicles, while Mahindra & Mahindra (M&M) slipped to fourth position with its market share contracting 451bps to 4.96% with sales of just 7,811 units. This is the first time the lobby group has released company-wise retail data.

Ashish Harsharaj Kale, president, FADA, said assuming that there will not be any further lockdown and reopening measures will continue, vehicle registrations are mostly expected to improve from the numbers reported in July.

“Demand continues to be a challenge coupled with supply-side constraints as well constraints in retail lending from NBFCs. Normalcy in demand still seems quite distant and not expected before the festive season. Despite the positive trends in the rural markets, the annual outlook currently continues to be grim with projected sales to witness a decline in the range of 15-35% across various segments in FY21," added Kale.

As a result of the sudden halt in economic activity due to the pandemic, retails of commercial vehicles also declined by a massive 72.18% to just 19,293 units.

Showroom sales of motorcycles and scooters also dropped by 37.47% to 8,74,638 units during the month. Retail sales though improved sequentially from 790,118 units in June due to quicker recovery in demand for entry and executive segment motorcycles in rural and semi-urban areas.

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