The Federation of Automobile Dealers Associations (FADA) released its vehicle retail data for September 2024, revealing a significant 9.26% year-on-year (YoY) decline in overall auto sales across India. Despite the onset of the festive season, key segments like two-wheelers (2W), passenger vehicles (PV), and commercial vehicles (CV) showed subdued performance.
Segment-wise Performance:
- Two-Wheelers: The 2W segment saw an 8.51% YoY decline, attributed to low consumer sentiment, delayed purchases due to heavy rains, and seasonal factors like Shraddh.
- Passenger Vehicles: The PV segment experienced a steep 18.81% YoY drop, reflecting weak consumer demand despite the festive season.
- Commercial Vehicles: The CV segment fell by 10.45% YoY, with only marginal month-on-month growth of 1.46%, driven by weak government spending.
- Three-Wheelers & Tractors: The 3W segment showed slight growth of 0.66%, while tractors posted a 14.69% YoY increase, buoyed by positive demand for e-rickshaws and favorable agricultural conditions.
Impact of Weather: The 2024 southwest monsoon, with rainfall 8% above normal, adversely impacted auto retail in several regions, reducing walk-ins and inquiries. The heavy rains disrupted consumer purchasing behavior, particularly in the two-wheeler and PV segments.
Inventory and Financial Concerns: FADA highlighted that PV dealers are grappling with record-high inventory levels of 80-85 days, representing 7.9 lakh vehicles worth ₹79,000 crore. This surge in unsold stock is causing cash flow issues for dealers. In response, FADA has called on the Reserve Bank of India (RBI) to implement stricter guidelines on channel funding to ease financial pressure on dealerships.
Looking ahead, FADA remains cautiously optimistic. With both Navratri and Diwali falling in October, the festive season is expected to provide a much-needed boost in sales. Favorable agricultural conditions and improved crop yields could further spur rural demand for two-wheelers, passenger vehicles, and tractors. However, dealers are facing high stakes, with heavy inventory levels posing a risk if sales do not meet expectations.
As dealerships prepare for a critical festive period, FADA urges strategic inventory management and targeted promotional offers to capitalize on the expected demand surge and stabilize market conditions.
