FADA Observes Around 55% Fall in Auto Sales in May 2021

The total vehicle registrations in May 2021 witnessed a fall by 54.79 per cent as sales in all categories including two-wheelers, three-wheelers, passenger vehicles, commercial vehicles and tractors declined significantly.

As per the data released by the Federation of Automobile Dealers Associations (FADA) on Thursday, total vehicle registrations in May 2021 fell 54.79 per cent to 5,35,855 units as against 11,85,374 units in April 2021. The sales were 70.69 per cent lower when compared to 18,22,566 units sold in May 2019.

Two-wheeler sales in May declined by 53 per cent while three-wheelers by 76 per cent, MoM. Passenger vehicle registrations also declined by 59 per cent and commercial vehicle registrations fell 66 per cent, MoM.

Tractor sales also witnessed a drop of 57 per cent. “The second wave of Covid has left the entire country devastated as there may not be a single household which did not get affected. Apart from urban markets, this time, even rural areas were badly hit. May saw continued lockdown in most of the states,” FADA president Vinkesh Gulati said.

He further said that the Auto Retail fraternity is in dire need of support. While a handful of OEMs (Tata Motors – CV, Renault, Bharat Benz and HMSI) have announced financial help to their channel partners, others are yet to do so.

''Hence, FADA humbly requests all those OEMs which have still not announced any financial assistance to kindly do it urgently,” said Gulati.

FADA also requested Prime Minister Narendra Modi to instruct RBI to grant moratorium for auto dealers and release guidelines for relaxation of loan re-payment equivalent to number of days of lockdown each state has been declaring.

“Since the current lockdown has already lasted well over 30-45 days and is still continuing in South India, revenue for most of the Dealers are negligible as there were minimal sales. Due to this, dealers will not be able to repay their loan tranche payment which is getting due. This will ultimately lead towards default. Since there are no guidelines, an extension of the tranche is considered as restructuring of loan. This will ultimately have a negative impact on Dealers' credit score as their CIBIL rating will get impacted,” Gulati said.

The monsoons arrived in India almost on time. If predictions are to be believed, normal and evenly spread rains may bring an early respite for the rural economy thus pushing demand for vehicles faster than expected, FADA added.

“It may be prudent to say that India may not witness a V–shaped recovery unlike last time. FADA hence continues to remain guarded in its optimism on overall industry recovery for the fiscal FY21-22,” the industry body said.