According to the Federation of Automobile Dealers Associations (FADA), retail sales of passenger vehicles, including cars and SUVs, in India grew 10 per cent to 3,20,129 vehicles in July this year as against 2,90,564 vehicles in the same month last year. “Dealers have reported good product availability, attractive schemes and benefit from a wide range of products,” CS Vigneshwar, vice-president, Federation of Automobile Dealers Associations (FADA), said in a statement.
He said heavy rains, subdued consumer sentiment and intense competition posed challenges, but dealers managed to maintain sales through strong promotions and incremental discounts. However, Vigneshwar also pointed out that this growth is accompanied by high inventory levels, which have reached a historic high of 67-72 days, equivalent to Rs 73,000 crore worth of stock. He said, “This poses a major risk to dealer stability, which requires extreme caution. FADA urges passenger vehicle (PV) original equipment manufacturers (OEMs) to be vigilant about potential dealer failures due to these high inventory levels.”
Two-wheeler retail sales stood at 14,43,463 units in July, up 17 per cent from 12,31,930 units in July 2023. Vigneshwar said the sector grew strongly due to a thriving rural economy, positive impact of better monsoon and government support programmes boosting rural incomes. “Despite market slowdown in some regions, excessive rains and increased competition, new product launches and better stock availability also contributed significantly,” he said.
Commercial vehicle (CV) retail sales grew 7 per cent year-on-year to 80,057 units last month. “Positive factors include growth in the construction and mining sectors, while challenges such as continued rainfall, negative sentiment in the rural market, poor finance availability and high vehicle prices were also seen,” Vigneshwar said. Tractor sales declined 12 per cent year-on-year to 79,970 units in July. FADA, which collects vehicle registration data from 1,568 of the 1,645 RTOs across the country, said the near-future outlook in auto retail sectors reflects a mix of optimism and caution. Two-wheeler sales are expected to be boosted by factors such as growth in the rural economy, positive impact of monsoon and launch of new products. The festive season starting after the festival season and favourable agricultural conditions are also likely to boost sales. On the other hand, heavy rains and erratic monsoon patterns may dampen demand in some regions. FADA said the PV segment may see mixed results in the near future. FADA said high inventory levels pose a significant risk and PV sales are also expected to be affected by the pandemic. It is important for OEMs to avoid further build-up of inventory to prevent financial pressure on dealers. It said the outlook for the commercial vehicle segment remains soft, with positive factors such as improved market access and the festive season, but challenges such as poor freight rates and ongoing rains pose risks.
