Vehicle sales record 5% growth in May: FADA

There has been a modest rise of 5% in the retail sale of vehicles in the month of May as compared to the same month last year, data released by the Federation of Automobile Dealers Associations (FADA) said on Friday.

The data said that in terms of segment-wise performance, two-wheeler remained the best category registering a rise of 7.3% on a year-on-year basis, followed by three-wheeler which registered a rise of 6.2%. The tractor segment registered a gain of 2.7% on yoy basis.

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Further, the Passenger Vehicle segment, Construction Equipment, and Commercial Vehicle declined by 3.1%, 6.3%, and 3.7%, respectively, the data said.

The passenger vehicle segment suffered a decline, on “Elevated inventory days and subdued consumer sentiment–particularly in entry-level models–compounded by war-related tensions for border-state (J&K, Punjab, Rajasthan, Gujarat) and margin-money challenges; healthy bookings offset by weak retail conversions,” FADA said.

It further said that the robust semi-urban/rural demand driven by auspicious marriage dates, strong Rabi harvest, and pre-monsoon pull helped the two-wheeler segment to register a year-on-year rise.

On the other side, financing constraints in the economy segment cap upside, which led to a decline of nearly 2% in the segment.

FADA projects that global supply-chain headwinds like rare-earth constraints in EV components, geopolitical tensions may limit urban consumer sentiment and exert cost pressure.

“Additionally, monsoon forecast 106 per cent of LPA signals renewed rural liquidity and stronger farm incomes, supporting 2W/trac traction in semi-urban and hinterland markets,” FADA said.