Auto Retail Sales Surge By 13.84 Per Cent in July: FADA

The Federation of Automobile Dealers Associations (FADA) has reported a significant 13.84% year-on-year growth in India's automobile retail sector for July 2024, despite challenges posed by uneven monsoon distribution and regional economic uncertainties.

Two-wheelers led the growth chart with a 17.17 per cent increase, followed by three-wheelers at 12.88 per cent, and passenger vehicles at 10.18 per cent. Commercial vehicles saw a modest 5.93 per cent uptick, while the tractor segment experienced a decline of 11.95 per cent.

(Also Read: Auto Sales July 2024: Hero MotoCorp Sales Decline)

FADA Vice President, C S Vigneshwar, attributed the strong performance in the two-wheeler segment to a robust rural economy, positive monsoon effects, and supportive government programs. New product launches and improved stock availability also played crucial roles in driving sales.

However, the passenger vehicle segment's growth comes with a caveat. Inventory levels have reached an alarming 67-72 days, equivalent to ₹73,000 crores worth of stock. This situation has prompted FADA to urge manufacturers to exercise caution and for the Reserve Bank of India to implement stricter checks on inventory funding.

The commercial vehicle segment reported mixed results, with growth in construction and mining sectors offset by challenges such as continuous rainfall and limited finance availability.

(Also Read: Auto Sales July 2024: Maruti Suzuki Domestic Sales Decline By 5.25%)

Looking ahead, FADA maintains a cautiously optimistic outlook. The upcoming festive season and new product launches are expected to boost sales, but concerns persist about heavy rainfall, high inventory levels, and economic uncertainties.

The Indian Meteorological Department's forecast of above-normal rainfall for August-September adds another layer of complexity, potentially impacting sales in flood-prone areas.

FADA emphasizes the need for careful inventory management and rigorous financial oversight to maintain growth and stability in the auto retail sector. As the industry navigates these challenges, the coming months will be crucial in determining the sustained health of India's automotive market.