Cars kept in a sales lot (Representative image).
Credit: Reuters Photo
Bengaluru: Passenger vehicle (PV) sales in India from companies to dealers saw a year-on-year (YoY) decline of 2.5% to 3,41,510 units in the last month, down from 3,50,355 units in July 2023, the industry body, SIAM, reported on Wednesday.
This decline is attributable to high base effect and reduced sales by companies to check high inventory levels with dealers amid lower-than-expected demand from consumers.
"The inventory levels are expected to moderate to an extent in the (upcoming) festive season; the wholesale volumes over the next months however remain monitorable in this regard," said Rohan Kanwar Gupta, Vice President and Sector Head - Corporate Ratings, ICRA Ltd.
"ICRA expects the PV industry to grow by 3-6% in the current financial year (FY) after an 8% YoY growth in FY24, backed by steady demand. The lower growth expectation for the current year partly stems from the waning pent-up replacement demand and a high base," he added.
According to the dealers’ body, Federation Of Automobile Dealers Associations (FADA), inventory levels with the dealers have surged to a historic high of 67-72 days, making for Rs 73,000 crores worth of stock, last month.
While the sales of sports utility vehicles grew by 4.1% YoY to 1,88,217 units, other passenger cars and vans declined by -12%, -1% respectively.
As in the previous month, two-wheeler sales, which reflects the purchasing power and health of rural India, witnessed a YoY growth of 12.5% reaching 14,41,694 lakh units in the month under review. This is followed by three wheeler sales which grew by 5.1 YoY to 59,073 units.
"The above average rainfall coupled with the upcoming festive season is likely to again propel growth in the short term. In addition, enabling Budget announcements which emphasises on overall economic growth with fiscal support for infrastructure and rural sector should augur well for the auto sector in the medium term,” said Vinod Aggarwal, President, SIAM.