New Vehicle Registrations In May Fell 55% Against April 2021 Due To COVID-19 Lockdown

The Federation of Automobile Dealers Associations (FADA) has released the monthly new vehicle registration data for May 2021. Last month the industry collectively saw 5,35,855 registrations, a month-on-month (MoM) drop of 55 per cent compared to 11,85,374 vehicles registered in April 2021. This is a direct result of the second wave of coronavirus, which led most states in India to go under a near-total lockdown, heavily impacting retail sales. Now, it won't be ideal to do a year-on-year (YoY) comparison to May 2020 given the fact that India was still facing a nationwide lockdown for the most part of May last year and the growth compared to those numbers would just be an anomaly.

To give you a perspective, in May 2020 total new vehicle registrations stood at 2,02,697, which is a YoY growth of 164 per cent compared to May 2021. At the same time, to give you an idea of pre-covid numbers, in May 2019, the industry saw 18,22,566 new vehicles registrations, and compared to that month, May 2021 saw a decline of 71 per cent.

Commenting on May 2021's performance, FADA President, Vinkesh Gulati said, "The 2nd 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. Not surprisingly, Auto Retail for the month witnessed bloodbath as sales fell by 55 per cent on MoM basis. Similarly, all categories of vehicles fell by a huge degree with 2W falling by 53 per cent, 3W by 76 per cent, PV by 59 per cent, Tractors by 57 per cent and CV by 66 per cent, respectively."

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As a direct result of the second wave of coronavirus, which led most states in India to go under a near-total lockdown, retail sales have been impacted

Commenting on the current market scenario, Sridhar V, Partner, Grant Thornton Bharat LLP. said, "The slump in vehicle registration is on expected lines primarily because of the lockdown and the negative impact of demand across India, rural and urban included this time around. While some states are opening up in a phased manner and have reflected in improvements in early June, significant improvement in the market, either through pent up demand or otherwise is expected in Q2 primarily based on all markets opening up only during the early stages of July 2021, assuming the numbers around pandemic are expected to reach pre-second wave levels or lesser. The industry will also have the challenge of shortage of input materials since much is talked about in the context of semiconductor and rubber."

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FADA says that since the current lockdown has lasted well over 30-45 days and is still continuing in South India, revenue for most of the Dealers are negligible as there was minimal sales. Due to this, dealers will not be able to repay their loan tranche payment which is getting due. To that effect, the apex body for dealers' associations has appealed to the Prime Minister that instead of restructuring, banks should allow a moratorium of 90 days to all categories of dealers without keeping a turnover limit.

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The two-wheeler sector reported 4,10,757 new registration, a 53 per cent decline against April 2021's 8,65,134 units

To give you a break-up, the passenger vehicle segment saw 85,733 new registrations, which is a 59 per cent MoM decline compared to 2,08,883 vehicles registered in April 2021. As for the two-wheelers sector, it reported 4,10,757 new registration, a 53 per cent decline against April 2021's 8,65,134 new two-wheeler registrations. As witnessed in the last few months, it was the three-wheeler space that took the biggest hit in May 2021. With 5,215 new registrations in May 2021, the segment witnessed a MoM decline of 76 per cent against 21,636 units registered in April 2021.

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The tractor segment, which was the only sector that was seeing some amount of growth also witnessed a 57 per cent decline against April 2021, with 16,616 new registrations in May 2021. The commercial vehicle (CV) segment also witnessed a heavy de-growth at 17,534 new registrations in May 2021. That's a 66 per cent decline compared to April 2021's 51,436 new registrations.