
Incessant rains left a detrimental effect on auto retail operations.
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Incessant rains left a detrimental effect on auto retail operations.
The Indian automotive industry experienced a modest growth of 2.88 per cent in August 2024 compared to the same month last year, as per the latest auto retail report by the Federation of Automobile Dealers Associations.
While two-wheeler sales registered a year-on-year (Y-o-Y) growth of 6.28 per cent, its month-on-month (M-o-M) sales declined by 7.29 per cent. Commercial vehicles were hit particularly hard, experiencing a sharp 8.5 per cent (M-oM) drop and a 6.05 per cent Y-o-Y decline. This drop was mainly attributed to rain disruptions and market saturation. The passenger vehicle segment also faced challenges, which saw its Y-o-Y sales decrease by 4.53 per cent last month compared to the 3.46 per cent decline it registered in July 2024.
FADA revealed that inventory management has become a pressing concern, especially in the passenger vehicle segment. The current stock levels range between 70-75 days, which translates to approximately 7.8 lakh vehicles valued at ₹77,800 crore. This high inventory is putting considerable pressure on dealers, who are struggling with cash flow and reduced profitability due to aggressive dispatches from manufacturers.
(Also Read: Auto Sales August 2024 - Legacy Two-Wheeler Brands Gain EV Market Share)
In response to these challenges, the Federation of Automobile Dealers Associations (FADA) has issued a call for action, urging banks and non-banking financial companies to control funding to dealers with excessive inventory. The organisation emphasises the need for both dealers and manufacturers to reassess their supply strategies to prevent a potential inventory crisis. Looking ahead, the industry faces a mix of positive and negative factors. For starters, the upcoming festive season which includes celebrations like Ganesh Chaturthi, Onam, and Navratri, is expected to boost consumer sentiment, particularly in urban areas.
(Also Read: Auto Sales August 2024: Bajaj Auto Sales Zoom Ahead By 18 Per Cent)
However, the India Meteorological Department forecasts continued heavy rains up until September, which could damage crops and weaken rural purchasing power. Industry analysts maintain a cautiously optimistic outlook. While the festive season offers growth opportunities, the auto retail market must navigate weather-related uncertainties and high inventory levels, stated FADA.
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