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

Apex dealer body, the Federation Of Automobile Dealers Associations (FADA), reported tepid passenger vehicle sales for a second month in a row in June 2024. The dealer body reported a cumulative sales growth of just 0.73 per cent as passenger vehicle sales again slid into the red. Tractor sales too saw a notable decline in the month compared to last year while commercial vehicle sales were also down year-on-year.

Also read: Maruti Suzuki Jimny Offered With Discounts Of Up To Rs 2.85 Lakh in July 2024

“June is traditionally one of the weakest months for India’s auto retail. This year, while the monsoon progressed normally up to Maharashtra, it lost momentum, delaying rains in West Bengal, Bihar, Uttar Pradesh, Chhattisgarh, and Madhya Pradesh. This exacerbated the effects of a severe heatwave in northwest India, contributing to a prolonged hiatus that not only intensified the heatwave but also delayed the sowing operations of kharif (summer sown) crops in northern and north-western regions, thereby impacting rural sales. As a result, India’s automobile retail experienced a modest YoY growth of just 0.73%,” said Manish Raj Singhania, President, FADA.

Also read: BMW India Reports Highest-Ever Half-Yearly Sales In First 6 Months Of 2024

The two-wheeler and three-wheeler segments were the only segments to see positive year-on-year growth in June growing 4.66 per cent and 5.10 per cent respectively. Two-wheeler sales stood at 13,75,889 units compared to 13,14,628 units last years. Sales however were down 10.36 per cent from 15,34,856 units sold in May 2024.

“The two-wheeler category faced significant challenges, with a MoM sales decline of 10.36 per cent, despite a 4.66 per cent YoY increase. Factors such as extreme heat which resulted in 13 per cent less walk-in’s, stalled monsoons and election-related market slowdowns particularly affected rural sales, which fell from 59.8 per cent in May to 58.6 per cent in June,” said Singhania.

Also read: Auto Sales June 2024: Maruti, Mahindra, Honda Show Positive Growth; Hyundai & Tata Report Decline

Three-wheeler sales meanwhile stood at 94,321 units, up from 89,743 units in the same month last year. Month-on-month however were down 4.01 per cent from 98,265 units in May 2024.

Passenger vehicle sales meanwhile stood at 2,81,566 units - down 6.77 per cent from 3,02,000 units last year. Month-on-month sales were down 7.18 per cent (3,03,358 units sold in May 2024).

“Passenger vehicle sales experienced a notable decline, falling by 6.77 per cent YoY and 7.18 per cent MoM. Inventory levels have reached an all-time high, ranging from 62 to 67 days. Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to extreme heat resulting in 15% less walk-in’s and delayed monsoons. Dealer feedback highlights challenges such as low customer inquiries and postponed purchase decisions. With the festive season still some time away, it is crucial for passenger vehicle OEMs to exercise caution. Effective inventory management strategies are essential to mitigate financial strain from high interest costs,” Singhania commented.

Also read: Two-Wheeler Sales June 2024: Honda, Hero MotoCorp, TVS Witness Growth In Sales

The tractor segment fell a significant 28.36 per cent with sales falling from 99,148 units last year to 71,029 units in June 2024. Sales however were up month-on-month by 1.38 per cent with sales of 70,065 reported in May 2024.

The commercial vehicle segment meanwhile dropped 4.74 per cent year on year with total sales of 72,747 units. Month-on-month sales were down by a more significant 12.42 percent.

“June presented various challenges, including delayed monsoons, poor market sentiment and postponed purchases due to low demand and funding delays. The industry continues to face degrowth, impacted by high temperatures affecting the agricultural sector and infrastructural project slowdowns,” said Singhania.

Commenting on its expectations for July, FADA said it expected some segments could see improved activity though overall growth could continue to remain tepid.