Passenger vehicle (PV) retail sales in India saw a 5 percent year-on-year decline in August 2024, driven by delayed customer purchases, poor consumer sentiment, and persistent heavy rains. According to the Federation of Automobile Dealers Associations (FADA), overall PV registrations last month totaled 3,09,053 units, compared to 3,23,720 units in August 2023.

FADA President Manish Raj Singhania raised alarm over the rising inventory levels across dealerships, warning of potential risks. “Even with the arrival of the festive season, the market remains under significant strain... Inventory levels have reached alarming levels, with stock days now stretching to 70-75 days and inventory totaling 7.8 lakh vehicles, valued at an alarming Rs 77,800 crore,” he said in a statement.

Singhania criticized PV Original Equipment Manufacturers (OEMs) for continuing to increase dispatches to dealers despite the current market situation, exacerbating the issue further. “Rather than responding to the situation, OEMs continue to push excess stock onto dealers. This is creating financial strain and poses a serious risk to the industry,” he added.

FADA has urgently called upon banks and Non-Banking Financial Companies (NBFCs) to intervene and limit funding to dealers with excessive inventory. Singhania also urged dealers to take swift action to halt stock intake to protect their financial health. “OEMs must recalibrate their supply strategies without delay, or the industry faces a potential crisis from this inventory overload.”

In addition to PV sales, the commercial vehicle segment also saw a 6 percent year-on-year decline in registrations for August, while tractor sales dropped by 11 percent. However, two-wheeler sales increased by 6 percent year-on-year, reaching 13,38,237 units last month, as improved stock availability and the onset of the festive season contributed to the growth. Three-wheeler retail sales also rose by 2 percent to 1,05,478 units.

Overall, vehicle registrations in August 2024 grew by 3 percent year-on-year to 18,91,499 units, compared to 18,38,501 units in the same month last year.

FADA remains cautiously optimistic about the business outlook in the near term, noting that the festive season and improved rural demand present opportunities for growth. However, the ongoing weather uncertainties and high inventory levels may temper the overall recovery. Strategic inventory management and targeted marketing initiatives will be crucial to maximizing festive sales and mitigating risks from adverse weather conditions, the association added.

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