New Delhi, Indi 6th July 2024: The Federation of Automobile Dealers Associations (FADA) today released Vehicle Retail Data for June’24.
June’24 Retails
FADA President Mr. Manish Raj Singhania provided insights on June 2024’s auto retail performance, stating, “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%. While the two-wheeler (2W) and three-wheeler (3W) segments registered positive YoY growths of 4.66% and 5.1% respectively, other categories such as passenger vehicles (PV), tractors (Trac) and commercial vehicles (CV) saw declines of 6.7%, 28.3%, and 4.7% YoY, respectively.
The two-wheeler category faced significant challenges, with a MoM sales decline of 10.36%, despite a 4.66% YoY increase. Factors such as extreme heat which resulted in 13% less walk-in’s, stalled monsoons and election-related market slowdowns particularly affected rural sales, which fell from 59.8% in May to 58.6% in June.
Passenger vehicle sales experienced a notable decline, falling by 6.77% YoY and 7.18% 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. FADA strongly urges PV OEMs to implement prudent inventory control and engage proactively with the market.
The commercial vehicle category also experienced a downturn, with sales decreasing by 4.74% YoY and 12.42% MoM. 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 de-growth, impacted by high temperatures affecting the agricultural sector and infrastructural project slowdowns.”
Near-Term Outlook
As we move into July 2024, the southwest monsoon has covered the entire country ahead of schedule, boosting prospects for kharif sowing. The newly elected government’s increase in minimum support prices (MSPs) for kharif crops is expected to improve disposable incomes in rural India, potentially enhancing auto retail performance. However, dealer feedback across the two-wheeler, passenger vehicle and commercial vehicle segments presents a cautious picture. While dealers anticipate better sales due to improved supply and new product launches, they express concerns over low customer inquiries and market sentiment dampened by heavy rains.
For two-wheelers, the arrival of the monsoon is expected to provide a boost, although challenges such as agricultural cash flow constraints and regional market variations remain. In the passenger vehicle segment, high inventory levels and ongoing low market sentiment necessitate cautious management. Meanwhile, 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. While some segments may see improved activity, overall growth is likely to be tempered by persistent challenges.
Key Findings from our Online Members Survey
Liquidity
Neutral 46.37%
Bad 27.82%
Good 25.81%
Sentiment
Neutral 49.60%
Bad 26.21%
Good 24.19%
§ Expectation from July’24
De-growth 41.53%
Growth 35.89%
Flat 22.58%