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Retail automobile sales up in April, but read between the lines

Present scenario indicates that the good times are still far away

Representative image | PTI Representative image | PTI

Still not out of the woods, but hope for the best. That was the message loud and clear between the lines as automobile sale figures for last month were unveiled Thursday.

Overall the figures of all India sales of vehicles in April 2022 show all categories from cars to bikes to commercial vehicles showing an increase — two wheelers show a 38 per cent increase in sales while passenger vehicles go up by 26 per cent. 

But it is still an anomaly, since the comparative months of April last year (second wave) and even April 2020 (the first national lockdown) do not give a true representation. The figures by the Federation of Automobile Dealers Associations (FADA) show that when you compare last month’s figures with those of April 2019, which was the last time when it was business as usual, the total vehicle retail then is revealed to be down by 6 per cent overall. The only saving grace is that passenger vehicles and tractors were up by 12 per cent and 30 per cent.

Worse still, the present scenario indicates that the good times are still far away. “April’22 when compared with April’19 reveals that we are still not out of the woods,” said FADA president Vinkesh Gulati. “With Russia–Ukraine war continuing and China under lockdown, the global Auto Industry continues to witness supply crunch as semi-conductor shortage along with high metal prices and container shortage prevails. Customers of PV segment hence continues to witness long waiting period.”

While the industry was enthused by the return to normal economic activity and rise in private discretionary spending, the repo rate increase by the Reserve Bank has come as the new villain. 

“This move will make auto loans expensive…two-wheeler segment is already reeling due to underperforming rural market, vehicle price hikes and high fuel costs,” according to a note by FADA.

Yet, the auto sector is hoping for the best, with FADA itself changing its outlook from ‘extremely cautious’ to just ‘cautious’ because of the slight recovery in near term. The reason for its enthusiasm? The predictions for a normal monsoon, which will have a positive rub-off on rural sentiments as farmers will be able to get better crop realisation which will increase their disposable income, a crucial factor that influences sale of two-wheelers and tractors. “This, along with (the upcoming) marriage season in coming days will also see a traction in auto retail,” FADA hopes.

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