Passenger vehicle retail sales in India declined by 5% in August compared to the same month last year, due to delayed customer purchases, poor consumer sentiment, and persistent heavy rains, according to the Federation of Automobile Dealers Associations (FADA).
The passenger vehicle registrations in August stood at 3,09,053 units, down from 3,23,720 units in August 2023. FADA raised concerns over rising inventory levels, which have reached alarming levels of 70-75 days of stock and a total inventory of 7.8 lakh vehicles valued at INR 77,800 crore.
FADA President, Manish Raj Singhania, commented on the auto retail performance for August 2024, stating, “In August, India witnessed 15.9% excess rainfall across the country, with northwest India seeing a surplus of 31.4%, 7.2% in the east and northeast, 17.2% in central India and a minor deficiency of 1.3% in the peninsular region. These weather anomalies have had a direct impact on India’s auto retail market.”
“Even with the arrival of the festive season, the market remains under significant strain. Inventory levels have reached alarming levels, with stock days now stretching to 70-75 days and inventory totaling 7.8 lakh vehicles, valued at an alarming INR 77,800 crore,” added Singhania.
Instead of addressing the situation, passenger vehicle Original Equipment Manufacturers (OEMs) continue to increase dispatches to dealers on a month-to-month basis, which worsens the issue further, he added.
“FADA urgently calls upon all banks and NBFCs to intervene and immediately control funding to dealers with excessive inventory,” said Singhania. He emphasised that dealers must act swiftly to stop taking on additional stock to protect their financial health.
“The 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,” he cautioned.
Commercial vehicle registrations saw a Y-o-Y decline of 6% in August, while tractor retail sales dropped by 11% compared to the same period last year.
Mixed performance
Two-wheeler sales saw a Y-o-Y increase of 6%, rising to 13,38,237 units in August from 12,59,140 units in the same month last year, due to improved stock availability and the onset of the festive season, Singhania noted.
Three-wheeler retail sales also saw a 2% growth to 1,05,478 units in August, compared to 1,03,782 units in the corresponding period last year.
Overall, vehicle registrations in August increased by 3% year-on-year to 18,91,499 units, as against 18,38,501 units in August last year.
