Vehicles sales see modest increase in May on back of two, three wheeler sales – FADA

The gains were driven by sales in the two-wheelers, three-wheelers and tractor segments, which by at 7.3%, 6.2%, and 2.7% respectively. The higher number of auspicious marriage days, a strong Rabi harvest, and pre-monsoon demand— especially in semi-urban and rural markets were key factors in the two-wheeler sales growth, the dealers’ body said.

However, the two-wheeler sales fell by 2.02% compared to the previous month at 16.52 lakh units.
Meanwhile, passenger vehicle (PV) and commercial vehicle (CV) sales were down by 3.1% and 3.7% respectively from last year. The situation is further worrisome for both segments which fell by over 10% compared sales in the previous month. The May sales for PV and CV segments were down by 13.64% and 11.25% on a month-on-month basis.
For passenger vehicles, though bookings remained fairly healthy, retail conversions lagged on margin-money challenges and deferred decisions, the body said, while it attributed the fall in the CV segment to muted freight cycles, tight liquidity, and adverse geopolitical sentiment.

Near-term outlook

FADA expects traction in the two-wheeler and tractor segments on back of a healthy monsoon forecast and an anticipated cut in the interest rates by RBI.

The central bank on Friday, June 6, announced its decision to cut its benchmark interest (repo) rate by 50 basis points, marking the third straight rate cut by the central bank, following two previous ones in February and April.

Also read: Reserve Bank of India delivers a 50 bps rate cut surprise; CRR cut by 100 bps