Passenger vehicle sales rise 10% in July to 320,129 units on new launches, discounts: FADA

As per FADA, total passenger vehicle retail sales increased to 3,20,129 units in July 2024 compared to 2,90,564 units in July last year (2023).

FADA vice president C S Vigneshwar said in a statement that dealers had reported benefits from good product availability, attractive schemes, and a wider range of products.

Heavy rains, low consumer sentiment, and intense competition posed challenges but dealers managed to sustain sales through strong promotions and incremental discounts, Vigneshwar said.

However, he highlighted high the inventory levels, which has surged to a historic high of 67-72 days equating to Rs 73,000 crore worth of stock, as per reports.

“This poses a substantial risk for dealer sustainability, necessitating extreme caution. FADA urges PV original equipment manufacturers (OEMs) to be vigilant about potential dealer failures due to these high inventory levels,” the FADA VP stated.

Vigneshwar said that it was also crucial for the Reserve Bank of India (RBI) to mandate financial institutions to implement stringent checks before releasing inventory funding, preferably requiring dealer consent or collateral to prevent the escalation of Non-Performing Assets (NPAs).

Meanwhile, the country's two-wheeler retail sales in July this year (2024) stood at 14,43,463 units, a rise of 17 percent, over 12,31,930 units sold in July 2023.

“The introduction of new products and better stock availability also contributed significantly, despite market slowdowns in certain regions, excessive rains, and increased competition,” the FADA VP said.

Last month (June), commercial vehicle retail sales grew 7 percent year-on-year to 80,057 units.

However, tractor sales dropped 12 percent year-on-year to 79,970 units in July this year.

FADA VP C S Vigneshwar said positive factors like growth in the construction and mining sectors, while challenges such as continuous rainfall, negative rural market sentiment, poor finance availability, and high vehicle prices were behind this trend.

According to FADA, the near-term outlook across the auto retail segments shows a blend of optimism and caution.

Meanwhile, two-wheeler sales are expected to be buoyed by factors such as a growing rural economy, positive monsoon impacts and the introduction of new products, the association stated, adding that the festive season and favourable agricultural conditions are also likely to contribute to increased sales.

FADA said it believes that heavy rainfall, ongoing agricultural activities and inconsistent monsoon patterns may dampen demand in certain areas.

The association said that the passenger vehicle segment could see mixed results in the near-term, while the festive season, attractive schemes and good monsoon are expected to boost sales, concerns over low consumer sentiment, heavy rainfall and a lack of new product launches persist.

The commercial vehicle (CV) segment faces a modest outlook, with positive factors including improved market reach and the festive season, tempered by challenges such as bad freight rates and ongoing rainfall, FADA added in the statement.