Informist, Friday, Jul 5, 2024

--FADA: Jun total vehicle retail sales 1.90 mln units, up 0.7% on yr

--FADA: Jun retail sales of tractors 71,029 units, down 28.4% on year

--FADA: Jun retail sales of CVs 72,747 units, down 4.7% on year

--FADA: Jun 3-wheeler sales 94,321 units, up 5.1% on year

--FADA: Jun 2-wheeler sales 1.38 mln units, up 4.7% on year

--FADA: Jun retail sales of passenger vehicles down 6.8% on year

--FADA: Retail sales of passenger vehicles at 281,566 units in Jun

MUMBAI – India's automobile retail sales in June saw modest growth on a year-on-year basis due to a delayed monsoon in several parts of the country and heatwaves, according to the Federation of Automobile Dealers Associations. Dealerships sold a total of nearly 1.89 mln vehicles in June, against 1.88 mln units in the year-ago period and 2.09 mln vehicles in May. While sales of two- and three-wheelers rose on year, volumes of passenger and commercial vehicles and tractors declined.

Two-wheeler retail sales, which account for around 73% of total vehicle sales, rose nearly 5% on year but were down slightly over 10% sequentially at 1.37 mln units in June. The two-wheeler category faced significant challenges during the month, including extreme heat which resulted in 13% less walk-ins, a stalled monsoon, and an election-related market slowdown which affected rural sales, said Manish Singhania, president of the Federation of Automobile Dealers Association. Sales of two-wheelers from rural areas fell from 59.8% in May to 58.6% in June.

Three-wheeler sales rose the most in June, with year-on-year growth recorded in most sub-categories. Segment volumes increased 5% on year, but were down 4% sequentially at 94,321 units. Except for the electric passenger rickshaw segment, all other segments posted growth over June 2023. While sales of electric passenger rickshaws fell nearly 3% on year to 37,963 units, those of internal combustion engine three-wheelers, used for ferrying passengers, rose slightly over 9% on year to 42,690 units.

Compared to two- and three-wheelers, sales of passenger vehicles were down both on year and sequentially. A total of 281,566 passenger vehicles were sold in June, down from 302,000 units in the year-ago period and 303,358 units in May.

Passenger vehicle inventory has reached an all-time high, ranging from 62 to 67 days. Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remained subdued due to extreme heat, resulting in 15% less walk-ins, Singhania said.

In June, the commercial vehicle category also experienced a downturn, with sales down nearly 5% on year and a little over 12% sequentially at 72,747 units. Light vehicle sales accounted for nearly 56% of the commercial vehicle sales in June, followed by the heavy and medium segment volumes.

"June presented various challenges (for the commercial vehicle segment), including delayed monsoon, poor market sentiment, and postponed purchases due to low demand and funding delays. The industry continues to face degrowth, impacted by high temperatures affecting the agricultural sector and infrastructural project slowdowns," Singhania said. In June, sales of tractors fell the most, by 28% on year, but rose over 1% on month to 71,029 units.

"June is traditionally one of the weakest months for India's auto retail sector. 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 crops in northern and north-western regions, thereby impacting rural sales," Singhania said.

The near-term outlook for automobile retail sales is "cautiously optimistic", with some segments likely to see improved activity in July. However, overall growth is expected to be tempered by persistent challenges, according to the association.

"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 for kharif crops is expected to improve disposable incomes in rural India, potentially enhancing auto retail performance," the association said.

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 are concerned about low customer inquiries and market sentiment being dampened by heavy rains. End

Reported by Darshan Nakhwa

Edited by Avishek Dutta

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