Indian Auto Retail Shows Modest Growth In June 2024: FADA

Abhijeet Singh
05 Jul 2024
11:23 AM
1 Min Read

This growth, while slight, highlights a mixed performance across different vehicle segments.

Indian Auto Retail Shows Modest Growth In June 2024: FADA mobility outlook

The Federation of Automobile Dealers Associations (FADA) has released the vehicle retail data for June 2024, revealing a modest year-on-year (YoY) growth of 0.73% in the Indian auto retail sector.

In June, the two-wheeler (2W) and three-wheeler (3W) segments reported positive YoY growths of 4.66% and 5.1%, respectively. However, other segments did not fare as well. Passenger vehicles (PV) experienced a decline of 6.77%, tractors saw a significant drop of 28.3%, and commercial vehicles (CV) fell by 4.74% YoY.

Several factors have contributed to the varied performance across segments. Extreme heat and delayed monsoons have particularly impacted rural sales, leading to low customer inquiries and postponed purchases. The PV segment has faced high inventory levels, ranging between 62 to 67 days, causing financial strain on dealers due to high-interest costs. FADA has advised PV original equipment manufacturers (OEMs) to adopt prudent inventory control measures to mitigate these challenges.

Despite the challenges, there is cautious optimism for the coming months. The southwest monsoon has advanced ahead of schedule, improving prospects for kharif sowing. The newly elected government's increase in minimum support prices (MSPs) for kharif crops is expected to boost rural disposable income, potentially enhancing auto retail performance. Improved product availability and substantial discounts are also anticipated to stimulate demand.

Dealer feedback indicates a mix of cautious optimism and concern. While new product launches and better supply conditions are expected to drive sales, there are still worries about low customer inquiries and market sentiment dampened by heavy rains. In the two-wheeler segment, the arrival of the monsoon is likely to provide a boost, although regional market variations and agricultural cash flow constraints remain challenges.

For the passenger vehicle segment, high inventory levels and subdued market sentiment necessitate careful management. The commercial vehicle sector looks forward to potential growth driven by renewed infrastructure projects and seasonal demands, despite current slowdowns.

While certain segments may experience improved activity, persistent challenges are expected to temper overall growth. Effective inventory management and strategic responses to market conditions will be crucial for sustained improvement in the Indian auto retail sector.

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