Auto retail sales fall 5% in Dec 2022; PV segment grows 8%

After two months of record sales, auto retail sales went into a lull in December 2022, the latest data shared by FADA (Federation of Automobile Dealers Associations), the apex national body of auto retail industry in India, says. On a year-on-year basis, the total vehicle retail sales fell by 5% in December 2022. Despite the negative overall sales, all the categories were in the green, except the two-wheelers segment, which fell 11% in December.

As compared to the pre-Covid month of December 2019, the overall vehicle retail dipped by 12%, with two-wheeler sales falling by 21%. Sales in all other categories -- like 3W, PV, tractor and CV -- rose 4%, 21%, 27% and 9%, respectively.

For the full calendar year 2022, the total vehicle retail sales grew by 15% YoY, and 17% when compared to 2020 but fell by 10% from the pre-Covid year of 2019, the data shows.

FADA's monthly data shows the PV segment continued to show remarkable consistency in growth during the entire year. A total of 2,80,016 vehicles were sold in the month as compared to 2,58,921 in the year-ago period, recording an 8.15% rise in sales.

The PV category posted record sales by clocking 34.31 lakh retail sales in CY’22. "While supply woes have decreased, better product spread and ever highest consumer offers have kept consumer interest on," said the national body of auto retailers. Maruti Suzuki India, Hyundai Motor India and Tata Motors led the chart in the PV segment at 1.16 lakh, 41,287, and 36,826 retail sales, respectively.

The PV category during CY 2022 continued to gain new ground by clocking 34.31 lakh retails during the full year. This is by far the highest retails, which PV has done to date, said the body.

As per FADA chief Manish Raj Singhania, the December retail sales recorded a 5% fall after the two super months of October and November. "Compared to the pre-covid month of December’19, the total retails were down by -12%. Here also, the 2W segment pulled down total sales as the same fell by -21%. All the other categories like 3W, PV, Tractor and CV showed growth of 4%, 21%, 27% and 9% respectively."

Similarly, the tractor category also broke all records to close at 7.94 lakh vehicles in CY’22. With BS-VI phase 2 norms kicking in shortly, vehicle price hikes may continue to affect sales during Q4 FY’23. For the auto industry to fully rise above the pre-covid period, Bharat and 2W segments need to perform.

Singhania said the two-wheeler segment, once again, failed to impress as retail sales during Dec 2022 continued to fall after two good months. "Reasons like rise in inflation, increased cost of ownership in the rural market yet to pick up fully and increased EV sales, the ICE 2W segment is yet to see any green shoots."

The FADA said the three-wheeler segment, which was completely down during Covid, has recovered well and narrowed its gap when compared to CY2019. Within the segment, the electric rickshaw sub-segment showed triple-digit growth, pushing the EV market share above the 50% mark.

The CV segment, which recorded continuous growth during 2022, is now almost at par with CY2019 retails, thanks to an uptick in demand in LCV, HCV, buses and construction equipment and the government’s continued push for infra development.

The tractor segment is the only other segment, apart from PV, which has grown well above CY2021, 20 and the pre-Covid year of 2019. It also registered a new lifetime high sales of 7.94 lakh in CY22. "This feat was possible due to consistently good monsoon, improved cash flow with farmers, better MSP of crops and the government’s focus on better procurements. Apart from this, timely sowing of rabi crop also helped to continue this momentum. Festive season sales which were normal after 3 years also played its part in this strong momentum,” said the FADA chief.

In its outlook, FADA says the global geopolitical headwinds, tightening monetary policy and the lingering effect of the pandemic will create a gloomy global outlook. At home, the RBI has also increased the repo rate by 225 basis points since May 2022. However, growth on the domestic front is expected to make sure India remains one of the world’s fastest-growing economies, it said.

For the last quarter of the fiscal year, FADA says it remains cautious as auto OEMs have done routine price hikes in December and announced them at the beginning of this year. Apart from this, BSVI phase 2 norms coming in, so more price hikes across all categories are expected.