Auto Industry Sales Grow 2.88 Per Cent In August 2024: FADA

The Federation of Automobile Dealers Association revealed that auto industry sales in the month of August 2024 remained relatively flat with a 2.88 per cent growth over last year. Key to this was the relatively strong sales of two-wheelers and three-wheelers in the month with the two segments the only ones to see sales grow year-on-year. Passenger Vehicles sales continued to stay in the red while commercial vehicle and tractor sales too were lower than in August 2023.

Also read: Auto Sales August 2024: Maruti Suzuki, Hyundai, Tata See Sales Decline; Kia, Toyota Report Growth

“This monsoon season brought unpredictable weather, starting with extreme heat

waves which delayed monsoon and transitioned into heavy rainfall, leading to flood-like conditions in several areas. These weather anomalies have had a direct impact on India's auto retail market, which registered a modest YoY growth of just 2.88 per cent in August. While the two-wheeler (2W) and three-wheeler (3W) segments managed to post growth at 6.28 per cent and 1.63 per cent, respectively, other categories faced significant setbacks. Passenger vehicle (PV) sales declined by 4.53 per cent, tractor sales dropped by 11.39 per cent and commercial vehicles (CV) saw a 6.05 per cent drop, underscoring the challenges the industry is grappling with, due to these volatile conditions,” said FADA President Manish Raj Singhania.

Two-wheeler sales grew 6.28 per cent year-on-year helping cumulative auto industry sales grow 2.88 per cent.

Starting with the two-wheeler segment, year-on-year sales were up 6.28 per cent from 12,59,140 units in August 2023 to 13,38,237 units. Singhania attributed this growth to improved stocks with dealers as well as the onset of the festive season. However, while year-on-year sales grew, they were down 7.29 per cent from July 2024.

Also read: Passenger Vehicle Sales Rebound In July After Tepid May And June: FADA

“The 2W market saw a MoM decline of 7.29 per cent, largely due to excessive rains and flooding, which disrupted demand across various regions. Many customers postponed their purchases, anticipating new product launches, while others deferred due to market saturation and changing preferences. Limited marketing efforts from OEMs and subdued market sentiment further impacted sales,” Singhania commented.

FADA also raised concerns about the passenger vehicle segment which witnessed sales fall both year-on-year and month-on-month. Sales in August 2024 stood at 3,09,053 units down 4.53 per cent from 3,23,720 units last year and down 3.46 per cent from July 2024. FADA also highlighted the plight of dealers who held a total inventory of 78 lakh vehicles valued at Rs 77,800 crore.

Also Read: FADA Reports Tepid Sales In June 2024 As Passenger Vehicle Segment Continues To Slide

Passenger vehicle sales remained down with FADA highlighting the growing levels of unsold inventory with dealers.

“FADA is raising SOS signals as PV sales fell by 3.46% MoM and 4.53% YoY. Even with the arrival of the festive season, the market remains under significant strain due to delayed customer purchases, poor consumer sentiment and persistent heavy rains. Inventory levels have reached alarming levels, with stock days now stretching to 70-75 days and inventory totalling 7.8 lakh vehicles, valued at an alarming Rs.77,800 crore. Rather than responding to the situation, PV OEMs continue to increase dispatches to dealers on a MoM basis, further exacerbating the issue,” said Singhania.

Singhania called for carmakers to “recalibrate their supply strategies” as well as calling upon banks and other financial institutions to “intervene and immediately control” funding to dealers with excess inventory. He also asked for dealers to stop taking on additional inventory to protect themselves financially.

FADA says that the adverse weather played a role in subdued demand and could continue to affect demand in the coming months.

Commercial Vehicle sales meanwhile were down 6.05 per cent year-on-year from 77,967 units last year to 73,253 units. Sales were down 8.5 per cent compared to July 2024 (80,057 as well. Tractor sales too witnessed a sharp slide in the month with 65,478 units sold. This marked an 11.39 per cent decline over August 2023 and an 18.12 per cent drop compared to July 2024. Lastly, the three-wheeler segment was the only other segment aside from two-wheelers to post a year-on-year growth. Sales grew 1.63 per cent over August 2023 though it was down 4.54 per cent over July 2024.

Commenting on the industry expectations from the coming months, FADA said that it was optimistic that the upcoming festive season and favourable rainfall in regions could help boost demand. The dealer body however also pointed out that excessive rainfall could adversely affect demand going forward by affecting crop yield and thus spending power as could the upcoming Shraddh period in September which is generally a lean time for new vehicle sales.