Passenger Vehicle Retail Sales In India Decline By 7 Per Cent In June Amid Severe Heatwave

PV registrations last month totaled 2,81,566 units, down from 3,02,000 units in June 2023

Passenger vehicle (PV) retail sales in India saw a 7 per cent year-on-year (YoY) decline in June, attributed to severe heatwave conditions that resulted in a 15 per cent reduction in showroom walk-ins, according to the Federation of Automobile Dealers Associations (FADA).

PV registrations last month totaled 2,81,566 units, down from 3,02,000 units in June 2023. "Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to extreme heat and delayed monsoons," FADA President Manish Raj Singhania said.

Dealers reported challenges such as low customer inquiries and postponed purchase decisions. Singhania also noted that passenger vehicle inventory levels have reached an all-time high, ranging from 62 to 67 days. "With the festive season still some time away, it is crucial for passenger vehicle Original Equipment Manufacturers (OEMs) to exercise caution," Singhania advised, highlighting the need for effective inventory management to mitigate financial strain from high interest costs.

Two-Wheeler Sales Rise, Commercial Vehicles and Tractors Decline

In contrast, two-wheeler registrations increased by 5 per cent YoY to 13,75,889 units in June. However, extreme heat led to 13 per cent fewer showroom walk-ins by potential customers, Singhania mentioned. Rural sales, particularly affected by stalled monsoon and election-related market slowdowns, fell from 59.8 per cent in May to 58.6 per cent in June.

Commercial vehicle sales dropped 5 per cent to 72,747 units last month, down from 76,364 units in June 2023. "The industry continues to face de-growth, impacted by high temperatures affecting the agricultural sector and infrastructural project slowdowns," Singhania said. Tractor sales saw a significant decline, falling 28 per cent year-on-year to 71,029 units in June.

Conversely, three-wheeler registrations rose by 5 per cent to 94,321 units, compared to 89,743 units in June last year. Overall, retail sales experienced a marginal year-on-year increase to 18,95,552 units in June.

Outlook and Recommendations

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

"Based on current market conditions, the overall rating for July auto retail performance is cautiously optimistic with a moderate outlook," FADA, representing over 30,000 dealership outlets, said. Vehicle registration data for the month was collated from 1,567 out of 1,700 RTOs across the country.

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