Retail auto sales fell 2.9% in March, FADA flags supply disruptions, rural stress

‘Auto sector to see strong turnaround only in FY24’

Supply-chain disruption, along with distress in the rural economy, is likely to stall the revival of the automobile sector, which is expected to see strong turnaround only in the next financial year, the Federation of Automobile Dealers Associations (FADA) said.

Overall retail sales in March fell 2.87% to 16,19,181 units, while full-year sales rose about 7% to 1,63,75,799, data from FADA showed.

“The near-term outlook for the Indian auto industry continues to remain challenging as the on-going Russia-Ukraine war and China lockdown are expected to hit supplies of critical components… We expect sales volumes to grow [in] single digit in the current fiscal," FADA president Vinkesh Gulati told reporters.

He, however, added that the federation expected the auto industry to be out of the woods and reach pre-pandemic highs by FY24.

In the last fiscal, passenger vehicle (PV) retail sales grew 14.2% to 27,26,047 units, while two-wheeler sales were up 3.81% to 1,19,73,415. “Crude is on a boil and hence fuel prices have been raised by around ₹10. This will continue to rise and further hit sentiments," Mr. Gulati added.

He said that while the PV segment was likely to see longer waiting periods due to supply-chain disruptions, the two-wheeler segment – which is already a ‘non-performer’ due to rural distress – may see further dampening due to a rise in vehicle ownership cost coupled with rising fuel costs.

“FADA remains extremely cautious in terms of any recovery in sight until the Russia-Ukraine war and the China lockdown come to an end,” Mr Gulati said.