PV Sales Plummet 5% In August; FADA Warns Against Soaring Inventory

FADA President noted that instead of addressing the issue, PV Original Equipment Manufacturers (OEMs) continue to ramp up dispatches to dealers each month, which is worsening the problem

Industry body Federation of Automobile Dealers Association (FADA) said on Thursday that India’s passenger vehicle (PV) retail sales fell 5 per cent year-on-year (YoY) in August because of the delay in customer purchases, weak consumer sentiment and ongoing heavy rainfall.

The total number of PV registrations last month was 309,053, down from 323,720 in August 2023.

"Even with the arrival of the festive season, the market remains under significant strain... 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," said FADA’s President Manish Raj Singhania in a statement.

Singhania noted that instead of addressing the issue, PV Original Equipment Manufacturers (OEMs) continue to ramp up dispatches to dealers each month, which is worsening the problem. 

"FADA urgently calls upon all banks and NBFCs to intervene and immediately control funding to dealers with excessive inventory," Singhania said. He also stressed that dealers must promptly stop acquiring additional stock to safeguard their financial stability. 

He warned that OEMs must urgently adjust their supply strategies to prevent a potential crisis due to inventory overload. "If this aggressive push of excess stock continues unchecked, the auto retail ecosystem could face severe disruption," Singhania cautioned.

In August, commercial vehicle registrations fell by 6 per cent YoY, while tractor sales dropped by 11 per cent compared to the same period last year. However, two-wheeler sales rose by 6 per cent YoY to 1,338,237 units, up from 1,259,140 units last August, driven by better stock availability and the start of the festive season. Three-wheeler retail sales increased by 2 per cent to 105,478 units last month, compared to 103,782 units a year earlier.

Overall registrations increased 3 per cent YoY to 1,891,499 units, up from 1,838,501 units in August of the previous year.

FADA said that looking ahead, it remains cautiously optimistic. While the festive season and improved rural demand offer promising growth opportunities, ongoing weather uncertainties and high inventory levels could dampen the overall recovery. FADA added that strategic inventory management and targeted marketing will be essential to maximising festive sales and mitigating risks from adverse weather conditions.