Retail automobile sales declined by 4% in April due to a drop in two-wheeler sales, particularly entry-level models, according to data from the Federation of Automobile Dealers Associations (FADA). Passenger vehicle sales, which had been increasing for nearly three quarters, also fell due to price increases implemented on 1 April.
The three-wheeler segment, on the other hand, grew 57% year-on-year as demand recovery sustained from the record lows in the aftermath of covid-19. Tractors and commercial vehicle sales saw a marginal growth of 1% and 2%, respectively, the data showed.
FADA reported a decline in two-wheeler and passenger vehicle sales due to decreased consumer demand, with the entry-level two-wheeler segment seeing a 19% drop compared to the pre-covid month of April 2019, contributing to a 12% decline in total vehicle retail.
Anticipating an increase in vehicle prices in April due to the enforcement of stricter BS-VI phase-two emissions norms, buyers snapped up vehicles in advance to take advantage of lower costs in March, contributing to a subsequent decline in sales.
“Low sales in the two-wheeler segment, with a 7% year-on-year decrease, can be attributed to limited supplies due to the on-board diagnostics phase-2 shift, untimely rains, and pre-buying in March. Model mix availability, rural sentiment, and demand in the 2-wheeler motorcycle segment remain weak. The rural economy has yet to show significant progress,” said Manish Raj Singhania, president of FADA.
“Unfavourable weather conditions in April, including untimely rains and hailstorms, caused crop damage in several states, exacerbating farmer concerns and potentially impacting entry-level 2-wheeler and passenger car sales”, he added.
While FY23 ended at a record high for passenger vehicle sales, the momentum slowed in April, with a marginal decline in sales in April of 1.35%, with retail registrations dropping to 282,000 in the month.
The decline in volumes comes on the back of the high base of last year. April was the first month of a retail sales decline for passenger vehicles in India in the last eight months.
“Although supplies are improving, there is a significant mismatch between customer demand and available inventory. Furthermore, entry-level PVs have fewer buyers, suggesting that customers at the bottom of the pyramid are still hesitant to upgrade from 2-wheelers to 4-wheelers. For the first time in eight months, the PV segment witnessed a year-on-year de-growth, potentially signalling a tapering demand in this segment,” FADA said in a statement.
On the other hand, commercial vehicle and tractor registrations grew 2% and 1.5% in April, respectively, compared to the same month last year. “However, dealers reported that vehicle availability was a major concern due to the OBD phase-II norms. The low base from last year also contributed to the positive growth,” Singhania said.
However, while FADA says its outlook for May is cautious as inventories build up at dealerships against the backdrop of muted demand, the upcoming marriage season in May is expected to bring about a sales resurgence, driven by an increase in customer inquiries for two-wheelers and passenger vehicles.