FADA on Monday released the retail data of the auto sector where two-wheelers (2W) rose by 2.5% Y-o-Y. Three-wheeler (3W) sales increased by 20% Y-o-Y, passenger vehicles (PV) declined by 1% Y-o-Y, tractors (Trac) de-grew by 1% Y-o-Y and commercial vehicles (CV) experienced a growth of 4% YoY.
“Extreme heat and elections significantly impacted footfall, with showrooms seeing an 18% drop in walk-ins. Elections and related uncertainties affected customer sentiment, delaying purchasing decisions,” FADA said in its media release.
FADA stated a positive rural demand can be there due to expected good monsoon and improved finance availability kept the counters ticking. Good movement in market loads, cement, iron ore, and coal sectors contributed positively despite supply constraints and lack of OEM marketing activities.
FADA president, Manish Raj Singhania, said, “In May 2024, the Indian Auto Retail sector achieved a modest 2.61% YoY growth. The two-wheeler (2W), three-wheeler (3W) and commercial vehicle (CV) segments grew by 2.5%, 20% and 4% while passenger vehicle (PV) and tractor (Trac) were in the red by 1% each YoY.
The two-wheeler segment grew by 2.5% YoY but declined by 6.6% M-o-M. Dealers reported supply constraints, lack of OEM marketing activities and impacts from extremely hot weather and elections. Positive rural demand due to expected good monsoon and improved finance availability were also noted which kept the counters ticking.”
Future outlook
The industry remains cautiously optimistic. Post-election stability and continuity in the government are expected to boost infrastructure projects and economic activities. Above-normal rains forecasted by the IMD should enhance rural demand and support economic activities. However, addressing extreme weather challenges, intense competition, and liquidity issues will be crucial for sustained market improvement.
“The PV segment showed -1% Y-o-Y and a -9.5% M-o-M decline. Dealers cited the impact of elections, extreme heat and market liquidity issues as major factors. Despite better supply, some pending bookings and discount schemes, the lack of new models, intense competition and poor marketing efforts by OEMs affected sales. Additionally, increased customer postponements and low enquiries further contributed to the challenging market conditions. Due to the extreme heat, the number of walk-ins to showrooms dropped by around 18%."
"The CV segment showed a 4% YoY growth but an -8% M-o-M decline. Dealers reported that elections and extreme climatic conditions heavily impacted sales. Despite growth due to a low base from last year and increased bus orders, the industry faced challenges from wholesale pressures, government policy effects, and negative market sentiment. Additionally, good movement in market loads, cement, iron ore, and coal sectors contributed positively," Singhania further added.
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