Passenger vehicle sales dip by 6.7% year-on-year in June: FADA

Retail passenger vehicle (PV) sales, in India, registered a year-on-year (YOY) decline of 6.7 per cent last month, the biggest dip in two and half years. A report released by the Federation of Automobile Dealers’ Association (FADA) on Friday, blamed this on the delayed monsoons and the intense heat waves experienced in North India, which impacted customer walk-ins at showrooms.

In fact, the weather impacted overall automobile sales making for a a modest YoY growth of just 0.73 per cent. Apart from the two wheeler and three-wheeler segments registering positive YoY growths of 4.66 per cent and 5.1 per cent respectively, all other categories such as passenger vehicles, tractors and commercial vehicles saw declines of 6.7 per cent, 28.3 per cent, and 4.7 per cent YoY, respectively.

In the case of passenger vehicles, despite increased product availability and significant discounts on offer to bolster sales, in-store visits by prospective customers fell 15 per cent. Resultantly, most dealers are left holding all-time high inventories, going up to 62-67 days in June. 

The two-wheeler segment, which acts as a barometer of the state of the rural economy and the purchasing power of that demography, the sales fell  10.36 per cent month-on-month, despite seeing a YoY growth. The walk-ins fell 13 per cent YoY in June. This too is being attributed to the stalled monsoons and the elections. 

"Dealer feedback highlights challenges such as low customer inquiries and postponed purchase decisions. With the festive season still some time away, it is crucial for passenger vehicle OEMs to exercise caution. Effective inventory management strategies are essential to mitigate financial strain from high interest costs. FADA strongly urges PV OEMs to implement prudent inventory control and engage proactively with the market," said Manish Raj Singhania, president, FADA .

As of July 2024, the southwest monsoon has covered the entire country early, aiding kharif sowing. The new government's increased minimum support price (MSP) for kharif crops may boost rural incomes and auto retail performance. However, dealers remain cautious due to low customer inquiries and market sentiment affected by heavy rains, the report added.