Retail auto sales saw a healthy start to the year, with all major categories registering growth, but segments such as two-wheelers continued to see lower sales compared to the pre-Covid period.
Total sales rose 13.6% to 18.27 lakh units in the month, according to the data from the Federation of Automobile Dealers Associations. Compared to the pre-Covid month of January 2020, the total sales were 8% lower, as two-wheelers have yet to recover to those levels.
"The two-wheeler category showed a growth of 10% year-on-year but when compared to 2021 and the pre-covid month of January 2020, it continued to see pressure as the same fell by 7% and 13%, respectively," Manish Raj Singhania, president of the dealers' body, said in a statement.
Sentiments are improving at a snail's pace as the rural market is yet to fully come to the party as the cost of ownership has shot up significantly while disposable income has not increased in the same ratio, he said.
With a spike in sales in October and November due to festive and wedding season demand, two-wheeler sales fell again in December, casting doubt on the segment's claimed demand recovery. Sales increased 10% to 12.65 lakh units in January.
Passenger vehicle sales continued to perform well in the month, with a 22% jump in sales to 3.40 lakh units.
The segment continues to see good inquiries, healthy bookings, and improved supplies of components, FADA said. However, the entry-level segment remains under pressure, while waiting times for some models have decreased, according to the report.
The three-wheeler sales saw a 60% jump to 65,796 units, coming close to the pre-Covid levels as the tally is just 3% lower compared to the sales in January 2020.
The electric vehicle fame-2 subsidy, combined with demand from the commercial 3W space, is fueling healthy growth, according to the dealers' body.
The demand for fleet replacement, governments' push for infrastructure development, and rise in freight availability aided commercial vehicle sales in the month, which rose 16.3% to 82,428 units.
Retail Auto Sales In January (YoY)
Passenger vehicle sales rose 22% to 3.40 lakh units.
Two-wheeler sales grew 10% to 12.65 lakh units.
Commercial vehicle sales rose 16% to 82,428 units.
Three-wheeler sales jumped 59% to 65,796 units.
Tractor sales rose 8% 73,156 units.
Outlook
Global supplies of auto parts and semiconductors are expected to recover with China's factory activity once again gaining pace, FADA said.
The body expects that the Union Budget's focus on increasing rural wages with a likely steady decline in inflation may also have a rub-off effect on two-wheeler sales.
The demand for entry-level two-wheelers and entry-level passenger vehicles is likely to accelerate due to an enhanced income tax rebate, budget allocation for vehicle scrappage policy, and import duty exemption for manufacturing lithium batteries, thus reducing EV acquisition costs, it said.
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