June auto registration down by 42%, tractor sales only silver lining

Covid-19 pandemic has hit hard the automobile industry including commercial vehicle segment with the June retail registration falling down by 42%. 

According to data released by the Federation of Automobile Dealers Associations (FADA), June Retail Registration fell by 42% as the country continues to battle with Covid-19. While two-wheeler registrations were down 40.92%, three-wheeler registrations slipped 75.43%.

The picture is also grim for commercial vehicles as registrations in the segment tumbled 83.83%. On the other hand, passenger vehicle registrations were down 38.34%. The only positive numbers came from tractor registrations as they were up two months in a row and the June registrations saw an uptick of 10.86%.

FADA President Ashish Kale said, "June registrations, although better than May is still not indicative of the actual demand situation as Lockdown woes continue in some parts and supply side is far from its complete potential." 

Robust demand recovery has been observed in rural market leading to rise in sales volume of tractors, followed by 2W, small commercial vehicle, he said. "M&HCV and PV sales, particularly in urban pockets, play laggards as lockdown persists in many cities."

According to FADA, demand boosters from the government can ensure speedier auto demand revival which is the need of the hour. To revive the CV market, attractive vehicle scrappage policy is one of the dire needs, it said.

Talking about July outlook, FADA said vehicle registrations will see somewhat similar trends and mostly will better the June numbers, with further green shoots of demand in newer geographies and segments if there is no further lockdown. 

Overall auto demand continues to be a challenge coupled with supply side constraints as well. 

On the issue of liquidity, the dealers association feels there are constraints in retail lending from NBFCs. Normalcy in demand still seems quite distant and not before the festive season.

Despite the positive trends in the rural markets, the annual outlook currently continues to be grim with projected sales to witness a de-growth range of 15% - 35% across various segments in FY21, except for the tractor segment, which looks set to clock a positive annual growth.