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NEW DELHI: Retail sales of vehicles across categories witnessed a sharp increase in July, on a sequential basis as dealerships reopened in most states across the country. Pent up demand for vehicles and inclination for personal mobility further boosted sales.

Showroom sales of passenger vehicles jumped by 42.14% month-on-month to 261,744 units compared to 184,134 units in June, as per sales data released by the Federation of Automobile Dealers Associations (FADA) on Monday.

Vinkesh Gulati, president, FADA, said that most states, except for the south, eased covid related restrictions from June and the auto industry witnessed improved sales due to the pent-up demand.

"While all the categories were in green, passenger vehicles maintain good demand as customers continued to show interest in vehicles for observing social distancing and safety of their families. Two-wheeler category though in green has witnessed a softer recovery as the rural market is taking time to get back from post covid stress," added Gulati.

Resumption in manufacturing and construction activity also led to a 46% increase in registrations of commercial vehicles to 52,130 units, although on a very low base. Sharp fall in cases in rural markets and easing of restrictions helped increase registrations of two-wheelers by 21.7% to 1,132,611 units in July compared to 930,324 units in June.

Though retail sales have shown signs of a rebound, passenger vehicle manufacturers might find it tough to maintain demand due to disruption in production caused by the shortage of semiconductors. Price hikes due to a continued increase in commodity prices might also be a spoiler.

The retail data is in line with the wholesale dispatches reported by the companies for July as leading vehicle manufacturers increased vehicle dispatches to dealerships to improve vehicle inventory.

Maruti Suzuki increased its domestic dispatches on a sequential basis by 9.83% to 136,500 units compared to 124,280 units in June. Hyundai also reported 18.63% month-on-month increase to 48,042 units in June compared to 25,001 units the month before. Tata Motors jumped 25.19% to 30,185 units as demand for its new products like Altroz has been steady.

Retails sales fell substantially in April and May due to an increase in covid cases, which led to the shutdown of dealerships and factories.

The auto industry came under pressure from the first week of April when Maharashtra began strict lockdown measures. Delhi, Haryana, Karnataka, Tamil Nadu and others followed the suit. Most automakers and their parts suppliers either stopped production or reduced output significantly.

Some like 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 automakers have resumed operations from mid-May.

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