The Federation of Automobile Dealers Associations (FADA) released the vehicle retail data for June 2024, revealing a modest year-over-year (YoY) growth of 0.73% in India’s auto retail sector. This data includes an in-depth analysis of the urban and rural market split, offering valuable insights into the performance of different segments and regions.
Overall Performance:
- Two-Wheelers (2W): The segment saw a positive YoY growth of 4.66%.
- Three-Wheelers (3W): Increased by 5.1% YoY.
- Passenger Vehicles (PV): Declined by 6.77% YoY.
- Tractors (Trac): Experienced a significant YoY decline of 28.3%.
- Commercial Vehicles (CV): Decreased by 4.74% YoY.
Challenges Identified:
- Extreme heat and delayed monsoons adversely affected rural sales.
- Low customer inquiries and postponed purchases due to heat waves.
- High inventory levels, especially in the PV segment, ranging from 62 to 67 days.
- Financial strain on dealers due to high-interest costs, prompting FADA to advise PV OEMs on prudent inventory control.
In-Depth Research Initiative:
FADA’s new initiative to provide percentage-based retail sales data for urban and rural markets aims to offer a deeper understanding of market performance. This segment-wise analysis serves as a valuable indicator of economic conditions.
Near-Term Outlook:
- The southwest monsoon has covered the entire country ahead of schedule, boosting prospects for kharif sowing.
- The government’s increase in Minimum Support Prices (MSPs) for kharif crops is expected to enhance rural disposable income, potentially improving auto retail performance.
- Improved product availability and substantial discounts aim to stimulate demand.
- Expectations of good rainfall and improved inventory levels.
- Availability of new models and ongoing sales promotions are likely to support future growth.
- Dealer feedback indicates cautious optimism with anticipated new product launches, despite concerns over low customer inquiries and heavy rains.
President’s Insights:
FADA President, Mr. Manish Raj Singhania, commented on the auto retail performance for June 2024, 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 several states. This exacerbated the effects of a severe heatwave, contributing to a prolonged hiatus that not only intensified the heatwave but also delayed the sowing operations of kharif crops, impacting rural sales.”
June 2024 Vehicle Retail Data Summary:
- Two-Wheelers: 13,75,889 units sold (4.66% YoY growth)
- Three-Wheelers: 94,321 units sold (5.1% YoY growth)
- Passenger Vehicles: 2,81,566 units sold (-6.77% YoY decline)
- Tractors: 71,029 units sold (-28.36% YoY decline)
- Commercial Vehicles: 72,747 units sold (-4.74% YoY decline)
Market Sentiment and Expectations:
Dealer feedback across segments indicates a cautious outlook for July 2024. While improved supply and new product launches are anticipated to boost sales, concerns remain over low customer inquiries and market sentiment dampened by heavy rains.
Key Findings from 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 2024:
- De-growth: 41.53%
- Growth: 35.89%
- Flat: 22.58%
