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FADA optimistic on near term outlook for auto sales


NEW DELHI, DEC 9, 2022

The hike in vehicle prices by the manufacturers and the fallout of the 35 basis points (bps) increase in the repo rate by the Reserve Bank of India (RBI) is likely to dent the confidence of two-wheeler and entry level car buyers, said the Federation of Automobile Dealers Associations (FADA).

According to FADA, post 35 bps repo rate (the rate at which the RBI lends to commercial banks) hike, the total repo rate is now 6.25 per cent, the highest since February 2019. “This will further lead to a higher cost of borrowing apart from the price hikes done by OEMs (original equipment manufacturers) and may dent the consumer confidence specially in 2W (two-wheeler) and entry level PV (passenger vehicle) segment,” FADA said on Friday.

Along with this, the China lockdown may play its part in slowing the supply of semiconductors. If this happens, it may act as a speed-breaker and add to the supply-demand mismatch which has been improving since the last few months, FADA added.

Due to the above reasons, FADA remains cautiously optimistic in the near term.

On the vehicle sales numbers last month, FADA President Manish Raj Singhania said: “November 2022 has clocked the highest retails in the history of Indian Automobile Industry with March’20 as an exception when retails were higher due to BS-4 to BS-6 transition.”

Auto Retail in November’22 saw an overall growth of 26 per cent. The baton was passed by the positive run of festive sales to the Great Indian Wedding Season (from November 14 to December 14) where around 32 lakh weddings will be solemnised across the country, he said.

According to him, the sector logged growth in all the vehicle segments last month. 

The 2-Wheeler segment showed a huge growth of 24 per cent YoY (Year-on-Year) but fell marginally by 0.9 per cent, when compared to Nov’19, a pre-covid year.This segment is slowly turning the tides from negative to positive as the same can be witnessed from retail sales due to the ongoing wedding season.

The 3-Wheeler segment showed a massive growth of 80 per cent YoY and 4 per cent when compared to 2019, a pre-Covid year. The category which was witnessing low demand during covid has now emerged as the highest growing category due to positive sentiments and fear of lockdowns out of mind. Also, electrification in the category continues at its highest pace.

The PV (Passenger Vehicle) segment showed a growth of 21 per cent YoY and 5 per cent when compared to 2019. Better availability of model mixes from past months, new launches and increase in rural demand continues to keep the segment in healthy condition. Compact SUV and SUV category coupled with higher variant models continues to rule to roost.

The CV (Commercial Vehicle) witnessed a growth of 33 per cent YoY and 6 per cent compared to 2019. With Government’s continued focus in the infrastructure space and new mining projects, replacement demand continued to pour in along with healthy inter-state passenger movement enabling bus sales.

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