New emission norms put brakes on passenger vehicle sales

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A combination of various factors such as limited supplies that comply with on-board diagnostics II, transition to second phase of Bharat IV emission norms, untimely rains in north India and pre-buying of models in March have affected two-wheeler registrations, indicating in turn slow sales.

The Federation of Automobile Dealers Association (FADA) data has revealed that there has been a 7.3% dip in retail sales of two-wheelers in April at 12.29 million units from 13.26 million in the same period last year. The sales of four-wheelers have, on the other hand, been less affected – it was down by 1.35% in the same month at 2,82,674 against 2,86,539  last year.

On-board diagnostics II refers to a system by which sensors inspect different subsystems in a vehicle and inform the electronic control unit of any possible faults. This self-diagnostic system is a requirement for modern vehicles.

Rural economy

Mahesh Raj Singhania, the president of FADA, thinks that one of the reasons affecting the sales of two-wheelers is that the rural economy is yet to register progress. To substantiate the argument, he pointed out that two-wheeler sales which are an important function of the health of the rural economy, is still down by as much as 19% when benchmarked against the pre-Covid April 2019 sales.

Buying activity at the bottom of the pyramid was still muted with limited buying of entry-level cars, a sign that experts interpret as the reluctance of those graduating from two-wheeler to four-wheeler.

First drop in 8 months

The FADA president claimed that passenger vehicle sales suffered a degrowth on a year-on-year basis for the first time in eight months. Pre-booking by a number of customers in apprehension of price rise could be a reason for this sluggishness.

Only the e-rickshaw sector witnessed hectic buying. Sales in April stood at 70,928 units which was a good 57.22% rise over the same month in 2022.

The sales of tractors crawled at a measly 1.48% — 55,835 units compared to 55,019 in April a year ago.

The number of commercial vehicles sold in April 2023 stood at 85,587 in comparison to 83,987 units, registering a meagre rise of 1.91%.

The total retail sales of vehicles in April 2023 stood at 1,724,935 units which was 4.03% down from the number recorded in April 2022.

The industry is now waiting eagerly for the marriage season when it thinks sales will pick up.

To rev up the sales of two-wheelers that account for 3 out of every 4 vehicle sales in the country, FADA has already urged the government to reduce GST from 28% to 18%.