MUMBAI: Passenger vehicle retail sales in India saw a 5 per cent year-on-year decline in August, driven by delayed customer purchases, weak consumer sentiment, and heavy rains, according to the Federation of Automobile Dealers Associations (FADA) on Thursday.
Passenger vehicle (PV) registrations dropped to 309,053 units last month, compared to 323,720 units in August 2023.
“Despite the onset of the festive season, the market remains under considerable pressure. Inventory levels have reached critical levels, with stock days now extending to 70-75 days and inventory totaling 780,000 vehicles, valued at an alarming Rs77,800 crore,” said FADA President Manish Raj Singhania.
Worsening situation
He also noted that PV Original Equipment Manufacturers (OEMs) are worsening the situation by continuing to increase dispatches to dealers on a month-on-month basis.
“FADA urgently calls on banks and NBFCs to intervene and limit funding to dealers with excessive inventory,” Singhania said.
He added that dealers must act quickly to avoid taking on additional stock and protect their financial stability. OEMs must also recalibrate their supply strategies to prevent an inventory crisis.
“If this aggressive push of excess stock continues unchecked, the auto retail ecosystem could face severe disruption,” Singhania warned.
In August, commercial vehicle registrations fell by 6 per cent year-on-year, while tractor retail sales dropped 11 per cent
2-wheeler sales
On a brighter note, two-wheeler sales increased by 6 per cent year-on-year, reaching 1,338,237 units, compared to 1,259,140 units last year, supported by better stock availability and the festive season.
Three-wheeler sales also rose by 2 per cent, with 105,478 units sold last month, up from 103,782 units in the previous year.
Overall, total vehicle registrations in August grew by 3 per cent year-on-year, totaling 1,891,499 units, compared to 1,838,501 units in August 2023.
Rural demand
Looking ahead, FADA expressed cautious optimism. While the festive season and stronger rural demand offer growth potential, weather uncertainties and high inventory levels could dampen recovery prospects.
FADA emphasized the importance of strategic inventory management and targeted marketing efforts to maximize festive sales and minimize risks from adverse weather conditions.
