Passenger vehicle retail sales up 40% in June as chip supply improves

Passenger vehicle retail sales in the country rose 40 per cent in June indicating an improvement in semiconductor supplies even as demand, especially for SUVs, remained robust, auto dealer' body FADA said on Tuesday.

According to the Federation of Automobile Dealers Associations (FADA), passenger vehicle (PV) registrations rose to 2,60,683 units last month, as compared to 1,85,998 units in June 2021, registering an increase of 40 per cent.

"The PV segment continued to see robust growth. An increase in dispatches clearly shows that semiconductor availability is now getting easier," FADA president Vinkesh Gulati said in a statement.

Due to chip shortage, however, waiting periods, especially in compact SUV and SUV segments, continue to remain high, he added.

Despite long waiting periods, new vehicle launches are witnessing robust bookings thus reflecting a healthy demand pipeline, Gulati said.

Two-wheeler retail sales last month rose 20 per cent to 11,19,096 units, as compared to 930,825 units in the year-ago period, FADA data showed.

Gulati noted that poor market sentiment especially in rural India, high cost of ownership, inflationary pressure and June generally being a lean month due to rains kept the two-wheeler sales at low speed.

Commercial vehicle retail sales also witnessed an 89 per cent year-on-year increase last month at 67,696 units.

Three-wheeler registrations surged last month to 46,040 units, as against 14,735 units in June last year.

Besides, tractor retail sales also increased by 10 per cent at 57,340 units last month, as compared to 52,289 units in June 2021.

Overall retail sales increased by 27 per cent at 15,50,855 units in June, as against 12,19,657 units in the year-ago period.

Gulati, however, noted that when compared to June 2019, a pre-COVID month, overall sales last month were still down by 9 per cent.

On business outlook, he stated that with the prices of almost all essential items having moved northwards, it has put a pressure on the common man's household budget.

Additionally, the high fuel prices have had a spillover effect on transportation and made it expensive, Gulati said.

This will have a negative effect on entry level PV as well as two-wheeler segments which are generally dominated by first time buyers, he added.

"On the other hand, ease in availability of semiconductors will see increased supply especially in the PV segment and thus reduce waiting period.

"If rural India stabilises, auto retail will enter the festive season on a good note," Gulati stated.