Retail vehicle sales fall 89% in May

Early June witnesses very low urban demand; survey points to buying interest

Retail sales of vehicles in the domestic market fell nearly 89% in May as the country began to open up partially after nearly two months of nationwide lockdown to slow the spread of COVID-19.

In May, total retail sales across categories stood at about 2.02 lakh units, compared with over 18.21 lakh vehicles sold last year, as per data released by the Federation of Automobile Dealers Associations (FADA).

Sales in April 2020 were nil due to the lockdown.

FADA president Ashish Kale said that at the end of May, of the 26,500 outlets, about 60% showrooms and 80% workshops were operational across the country. Hence, registrations were not indicative of demand.

He, however, added that the first 10 days of June witnessed extremely low demand and weak consumer confidence, especially in urban areas, as customers stayed away due to the threat of community spread.

Mr. Kale said that assuming there would be no further lockdown, a substantial pick-up is anticipated in retail sales in comparison to May, “but the overall outlook continues to be grim with projected sales to witness a de-growth upwards of 25% over the previous year”.

Two wheeler sales in the last month nosedived 88.8% to about 1.59 lakh, while that of passenger vehicles was down 87% to 30,749 units, commercial vehicle sales fell 96.93% to 2,711 units, and tractor sales declined 75.58% to 8,317 units.

Car purchase, a priority

Separately, a survey by EY showed that with the nationwide lockdown being lifted in phases, a car is likely to be top priority among purchases by consumers.

The survey, conducted among 1,120 people with nearly 90% in the 18-42 age bracket, found that 74% respondents are leaning towards owning a vehicle and considering it to be a priority purchase post the relaxation of the national lockdown.

While about 57% of first-time buyers said they were likely to buy a pre-owned vehicle, 57% of existing car owners are likely to upgrade their car, the survey said, adding that 37% of respondents are likely to buy within the hatchback segment.

Som Kapoor, partner and automotive retail lead, EY India said, “We are sensing a shift in preferences from shared mobility / public transport to their own vehicle owing to perception of increased health and safety in one’s own vehicle. This will provide an impetus to entry level and compact vehicle segments in the near future.”

With inputs from The Hindu