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FADA is raising SOS signals as PV sales fell by 3.46 per cent month-on-month and 4.53 per cent year-on-year | Photo: Shutterstock
Owing to the impact of excess rainfall, passenger vehicle (PV) retail sales in India declined by 4.53 per cent in August to 3,09,053 units, compared to 3,23,720 units during the same month in 2023, according to the Federation of Automobile Dealers Associations (FADA). Inventory levels also reached historic highs, with stock days now stretching to 70-75 days and inventory totalling 780,000 vehicles, valued at an alarming Rs 77,800 crore.
Similarly, tractor and commercial vehicle (CV) sales dropped by 11.39 per cent and 6.05 per cent, respectively. On the other hand, the two-wheeler (2W) and three-wheeler (3W) segments managed to post growth of 6.28 per cent and 1.63 per cent, respectively. In total, India’s automobile retail market registered a modest year-on-year growth of just 2.88 per cent in August.
“Excess rainfall has affected enthusiasm in the rural market, resulting in a drop in sales, mainly in two-wheelers. We expect an overall 6 per cent rise in auto retail sales for the entire year,” said Manish Raj Singhania, president, FADA. In August, India witnessed 15.9 per cent excess rainfall across the country, with northwest India seeing a surplus of 31.4 per cent, 7.2 per cent in the east and northeast, 17.2 per cent in central India, and a minor deficiency of 1.3 per cent in the peninsular region. This monsoon season brought unpredictable weather, starting with extreme heat waves that delayed the monsoon and transitioned into heavy rainfall, leading to flood-like conditions in several areas.
The two-wheeler market saw a month-on-month decline of 7.29 per cent, largely due to excessive rains and flooding, which disrupted demand across various regions. Despite these challenges, the two-wheeler segment grew by 6.28 per cent year-on-year. Interestingly, the gap between market leaders Hero Motocorp (3,58,616 units) and Honda Motorcycle and Scooter India (3,52,605 units) was marginal, with a market share of 26.8 per cent and 26.35 per cent, respectively.
“Many customers postponed their purchases, anticipating new product launches, while others deferred due to market saturation and changing preferences. Limited marketing efforts from OEMs and subdued market sentiment further impacted sales,” he added.
Commercial vehicle sales experienced a sharp drop, with an 8.5 per cent month-on-month decline and a 6.05 per cent year-on-year fall. In addition to heavy rains, floods, and landslides, which severely impacted market activity, reduced construction activity and sluggish demand in industrial sectors further strained sales. CV sales for the month stood at 73,253 units, compared to 77,967 units in August 2023.
FADA is raising SOS signals as PV sales fell by 3.46 per cent month-on-month and 4.53 per cent year-on-year. “Even with the arrival of the festive season, the market remains under significant strain due to delayed customer purchases, poor consumer sentiment, and persistent heavy rains. Inventory levels have reached alarming levels. Rather than responding to the situation, PV OEMs continue to increase dispatches to dealers on a month-on-month basis, further exacerbating the issue,” Singhania said.
FADA has called on banks and non-banking financial companies (NBFCs) to intervene and control funding to dealers with excessive inventory. “Dealers must also act swiftly to stop taking on additional stock to protect their financial health. OEMs, too, must recalibrate their supply strategies without delay, or the industry faces a potential crisis from this inventory overload. If this aggressive push of excess stock continues unchecked, the auto retail ecosystem could face severe disruption,” Singhania warned
First Published: Sep 05 2024 | 11:30 AM IST
