Passenger Vehicle Sales Drop 1% In May Amid Heatwave, Two-Wheeler Sales Rise

Three-wheeler retail sales surged by 20 per cent YoY to 98,265 units in May. Commercial vehicle sales also grew by 4 per cent, totaling 83,059 units last month compared to 79,807 units in May 2023

Passenger vehicle sales: Domestic passenger vehicle retail sales fell by 1 per cent year-on-year (YoY) in May, impacted by scorching summer temperatures and ongoing elections, the Federation of Automobile Dealers Associations (FADA) reported on Monday. Passenger vehicle (PV) registrations dropped to 303,358 units last month from 335,123 units in May 2023. FADA President Manish Raj Singhania attributed the decline to a combination of election activities, extreme heat, and liquidity issues in the market.

"Dealers reported that these factors significantly impacted sales last month," Singhania said. He noted that despite an improved supply, existing bookings, and discount schemes, the absence of new model launches, fierce competition, and inadequate marketing efforts by original equipment manufacturers (OEMs) further dampened sales.

Singhania highlighted that the month witnessed a rise in customer postponements and reduced showroom visits, with walk-ins declining by about 18 per cent due to the extreme heat.

Two-wheeler sales

Conversely, two-wheeler sales saw a 2 per cent increase, reaching 1,534,856 units in May, up from 1,497,778 units in the same month last year. "Positive rural demand, thanks to good rainfall in some regions and better finance availability, helped sustain two-wheeler sales," Singhania explained.

Three-wheeler sales

Three-wheeler retail sales surged by 20 per cent YoY to 98,265 units in May. Commercial vehicle sales also grew by 4 per cent, totaling 83,059 units last month compared to 79,807 units in May 2023. "Despite the growth spurred by a low base from last year and increased bus orders, the industry still faced challenges from wholesale pressures, government policies, and negative market sentiment," Singhania observed.

Looking ahead, Singhania described the near-term outlook for automobile retail as "cautiously optimistic," shaped by a blend of positive and challenging factors across different segments. He expressed hope that the formation of a new government would bring stability and improve market sentiment. Dealers are also optimistic about better supplies and positive trends in key sectors like cement, coal, and iron ore.

Singhania said above-normal rainfall during the monsoon season is expected to boost rural demand and support economic activities. However, he cautioned that extreme weather conditions, such as heatwaves and heavy rains, along with the reopening of schools in July, could delay purchase decisions. Challenges remain, including intense competition, a lack of new model launches, and poor marketing efforts by OEMs, he added.

FADA, representing over 15,000 automobile dealerships with more than 30,000 dealership outlets, compiled sales data from 1,360 out of 1,503 Regional Transport Offices (RTOs) nationwide.

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