PV sales rise 10 pc in July on new launches, enhanced discounts: FADA

NEW DELHI: Passenger vehicle sales recorded a 10 percent on-year jump in July driven by new model launches and enhanced discounts, according to Federation of Automobile Dealers Associations (FADA).

Total passenger vehicle retail sales rose to 3,20,129 units in July compared to 2,90,564 units in July 2023.

“Dealers reported benefits from good product availability, attractive schemes, and a wider range of products,” FADA Vice President C S Vigneshwar said in a statement.

Heavy rains, low consumer sentiment, and intense competition posed challenges but dealers managed to sustain sales through strong promotions and incremental discounts, he added.

However, the FADA VP highlighted high the inventory levels, which has surged to a historic high of 67-72 days equating to Rs 73,000 crore worth of stock.

“This poses a substantial risk for dealer sustainability, necessitating extreme caution. FADA urges PV original equipment manufacturers (OEMs) to be vigilant about potential dealer failures due to these high inventory levels,” he stated.

It is also crucial for the Reserve Bank of India (RBI) to mandate financial institutions to implement stringent checks before releasing inventory funding, preferably requiring dealer consent or collaterals to prevent the escalation of NPAs, he added.

Two-wheeler retail sales in July stood at 14,43,463 units, an increase of 17 percent, over 12,31,930 units sold in July last year.

“The introduction of new products and better stock availability also contributed significantly, despite market slowdowns in certain regions, excessive rains, and increased competition,” Vigneshwar added.

Meanwhile, commercial vehicle retail sales grew 7 percent year-on-year to 80,057 units last month. However, tractor sales declined 12 percent year-on-year to 79,970 units in July.

Positive factors like growth in the construction and mining sectors, while challenges such as continuous rainfall, negative rural market sentiment, poor finance availability, and high vehicle prices were behind this trend, the FADA VP said.

According to the association, the near-term outlook across the auto retail segments shows a blend of optimism and caution.

Two-wheeler sales are expected to be buoyed by factors such as a growing rural economy, positive monsoon impacts and the introduction of new products. The festive season and favourable agricultural conditions are also likely to contribute to increased sales.

However, heavy rainfall, ongoing agricultural activities and inconsistent monsoon patterns may dampen demand in certain areas, feels FADA.

The PV segment could see mixed results in the near-term. While the festive season, attractive schemes and good monsoon are expected to boost sales, concerns over low consumer sentiment, heavy rainfall and a lack of new product launches persist, it said.

The CV segment faces a modest outlook, with positive factors including improved market reach and the festive season, tempered by challenges such as bad freight rates and ongoing rainfall, FADA said.