The Federation of Automobile Dealers Associations (FADA) reports that retail sales of passenger vehicles, including cars and SUVs, increased 10% to 3,20,129 vehicles in July of this year from 2,90,564 vehicles in the same month previous year. The increase was attributed to the introduction of new models and larger discounts.
According to a statement from Vice President C S Vigneshwar of the Federation of Automobile Dealers Associations (FADA), “Dealers reported benefits from good product availability, attractive schemes, and a wider range of products.”
Dealers were able to maintain sales with robust promotions and incremental discounts, despite constraints created by heavy rains, low consumer attitude, and fierce competition, he continued.
Vigneshwar did, however, also note that the expansion is being accompanied by elevated inventory levels, which have risen to an all-time high of 67–72 days, or Rs 73,000 crore, of stock.
“This requires extreme caution as it poses a substantial risk to the sustainability of dealers.” FADA cautions original equipment manufacturers (OEMs) of passenger vehicles (PVs) about the possibility of dealer failures brought on by these high inventory levels.
Retail sales of two-wheelers increased by 17% in July to 14,43,463 units from 12,31,930 units in July 2023.
According to Vigneshwar, the category grew rapidly as a result of a strong rural economy, the benefits of a better monsoon, and government support initiatives that increased rural incomes.
“Despite market slowdowns in certain regions, excessive rains, and increased competition, the introduction of new products and better stock availability also contributed significantly,” he continued.
Retail sales of commercial vehicles (CVs) increased 7% year over year to 80,057 units last month.
According to Vigneshwar, “challenges like persistent rainfall, negative rural market sentiment, poor finance availability, and high vehicle prices were also noted, but positive factors included growth in the construction and mining sectors.”
July had a 12% year-over-year fall in tractor sales, totaling 79,970 units.
The FADA, which compiled vehicle registration data from 1,568 of the 1,645 RTOs in the nation, observed that there is a mix of caution and optimism on the near-term forecast for the auto retail categories.
Sales of two-wheelers are predicted to rise as a result of new product launches, favorable monsoon effects, and expanding rural economies. Favorable agricultural conditions and the holiday season that follows the Aadi festival are also anticipated to boost sales.
However, excessive rains and erratic monsoon patterns could reduce demand in some regions. In the near future, the PV segment may witness mixed outcomes, according to FADA.
High inventory levels are dangerous, and in order to protect dealers’ finances, PV OEMs must refrain from adding more stock, according to FADA.
The holiday season and expanded market reach are two positive aspects of the CV segment’s optimistic outlook, but risks include poor freight rates and persistent rain.
