Impressive Growth of EVs Contributes 8% to Total Vehicle Retail Sales, Indicating a Promising Future

In a remarkable turnaround for the auto retail sector, May witnessed a significant rebound in sales, primarily attributed to the surge in electric vehicle (EV) purchases, according to a report released by the Federation of Automobile Dealers Association (FADA). The report reveals that EVs made impressive strides last month, accounting for 8% of the total vehicle retail sales, contributing to the overall 10% year-on-year growth.

FADA President Manish Raj Singhania highlighted the noteworthy contributions of various vehicle segments to this growth. Two-wheelers witnessed a 9% increase, while three-wheelers experienced an astonishing 79% surge in sales. Passenger vehicles and commercial vehicles also saw positive growth, with a 4% and 7% rise, respectively.

Singhania attributes the boost in two-wheeler sales to a combination of seasonal factors, changes in FAME subsidies, and the recovery of rural demand. The marriage season and the implementation of revised subsidies played a pivotal role in influencing consumer behavior positively. Furthermore, the passenger vehicle segment rebounded due to improved vehicle availability, pending orders, and robust demand for new launches.

The commercial vehicle segment, known as the barometer of the economy, maintained steady growth, propelled by the government’s unwavering focus on infrastructure development. Notably, the bus segment experienced a notable increase, driven by improved financing options and higher sales in academic institutions.

While the industry witnessed substantial growth, Singhania emphasized that challenges lie ahead for the auto retail sector across various segments. For two-wheelers, concerns regarding weather-induced walk-in reductions, inventory management, and regulatory norms persist, despite the potential boost in demand from seasonal factors. The commercial vehicle sector anticipates improved vehicle availability but remains cautious of potential impacts from regulatory norms and seasonal effects. In the passenger vehicle segment, increased demand is expected, especially for new models, compact and full-sized SUVs, and EVs. However, the sector may face challenges related to inventory pressure and ensuring the availability of the right models.

With the EV market showing remarkable progress, the auto retail industry appears poised for a promising future in the aftermath of the COVID-19 pandemic. The substantial contribution of EVs to total vehicle retail sales in May indicates a growing acceptance and adoption of sustainable transportation options. As the market continues to evolve, industry stakeholders must navigate challenges and seize opportunities to meet the evolving demands and preferences of consumers.