On Thursday, the Federation of Automobile Dealers Associations of India (FADA) reported that vehicle registrations in July dipped 8% year on year. This can be attributed to heavy rains in many parts of the country. Inflation is another major reason which dissuaded new purchases.
In all segments of vehicles, total registrations in July fell to 14 36,927 units. The value was 15 59,106 units in the same month last year. In comparison to July 2019, the overall drop this time was a sharp 20%.
Poor demand in rural India has led to lower overall volumes in July. On the other hand, sales in urban markets suffered due to inflation, erratic monsoon and high cost of ownership. However, PV (passenger vehicle) segment has registered higher growth vis-à-vis 2019. Although the SUV (Sports Utility Vehicle) segment softened in July, new model launches continued the momentum. FADA said that the longer waiting period would be minimised by improving the supply situation in the coming months. It has also urged all OEMs (original equipment manufacturers) to recalibrate their supplies per market demand.
As some states got less rainfall, the unfavourable weather decreased Kharif sowing, which caused decreased tractor sales. However, the body said it remains cautiously optimistic as it enters the festival season, which may drive growth.
India’s services sector PMI (purchasing manager’s index) dropped to 55.5 in July, a 4-month low. This indicates that economic growth slowed down as a result of inflationary pressure and weaker sales in the previous month.