Passenger vehicle sales in India decline by 7% in June amid severe heatwave: FADA Report

Passenger vehicle retail sales in India fell by 7% year-on-year in June, with severe heatwave conditions contributing to a 15% drop in showroom walk-ins, according to the Federation of Automobile Dealers Associations (FADA). Total passenger vehicle registrations last month were 2,81,566 units, compared to 3,02,000 units in June 2023.

Dip in passenger vehicle sales

FADA President Manish Raj Singhania noted that despite improved product availability and substantial discounts, market sentiment remains subdued due to extreme heat and delayed monsoons. Dealer feedback indicated challenges such as low customer inquiries and postponed purchase decisions. Inventory levels of passenger vehicles have reached an all-time high, ranging from 62 to 67 days.

Singhania emphasized the need for passenger vehicle Original Equipment Manufacturers (OEMs) to exercise caution and implement effective inventory management strategies to mitigate financial strain from high interest costs. FADA urges OEMs to adopt prudent inventory control and proactively engage with the market.

In contrast, two-wheeler registrations increased by 5% year-on-year to 13,75,889 units in June. However, extreme heat led to a 13% decrease in potential customer walk-ins. Stalled monsoon and election-related market slowdowns particularly impacted rural sales, which fell from 59.8% in May to 58.6% in June.

Commercial vehicle sales drop

Commercial vehicle sales dropped by 5% to 72,747 units last month, from 76,364 units in June 2023. The industry continues to face challenges due to high temperatures affecting the agricultural sector and infrastructural project slowdowns. Tractor sales also declined by 28% year-on-year to 71,029 units in June.

Three-wheeler registrations rose by 5% to 94,321 units in June, compared to 89,743 units in the previous year. Overall retail sales increased marginally year-on-year to 18,95,552 units in June.

FADA's outlook for the two-wheeler segment is optimistic with the arrival of the monsoon expected to boost sales, despite challenges such as agricultural cash flow constraints and regional market variations. In the passenger vehicle segment, high inventory levels and ongoing low market sentiment necessitate cautious management. The commercial vehicle sector anticipates potential growth driven by renewed infrastructure projects and seasonal demands, despite current slowdowns.

FADA, representing over 30,000 dealership outlets, collated vehicle registration data for June from 1,567 out of 1,700 RTOs across India. The overall rating for July auto retail performance is cautiously optimistic with a moderate outlook.

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