Indian Auto Retail Sector Sees Mixed Results In May 2024: FADA

Pratik RakshitJun 10, 2024

Share Post

Supply constraints and limited marketing activities by original equipment manufacturers (OEMs) posed challenges.

The Indian Auto Retail sector experienced modest growth of 2.61 per cent year-on-year (YoY) in May 2024, according to the Federation of Automobile Dealers Associations (FADA). However, the overall performance was marked by significant variations across different vehicle segments and the impact of several market factors.

In the two-wheeler (2W) segment, sales increased by 2.5 per cent YoY, though there was a month-on-month (MoM) decline of 6.6 per cent. This growth was supported by positive rural demand, driven by expectations of a good monsoon and improved financial accessibility. On the other hand, the three-wheeler (3W) segment posted a robust 20 per cent YoY growth, largely due to strong sales of electric rickshaws and goods carriers.


Conversely, the passenger vehicles (PV) segment faced a 1 per cent YoY decline and a 9.5 per cent MoM drop. Election-related uncertainties, extreme heat, and market liquidity issues were major factors contributing to this decline. Similarly, the tractor segment experienced a 1 per cent YoY decline despite better supplies and positive market demand. Meanwhile, commercial vehicles (CVs) grew by 4 per cent YoY but saw an 8 per cent MoM decline, with growth supported by movements in market loads, cement, iron ore, and coal sectors.

Several market factors influenced these performances. Positive sentiments were driven by the anticipation of a good monsoon and improved financial accessibility, which supported rural demand. However, supply constraints and limited marketing activities by original equipment manufacturers (OEMs) posed challenges. Extreme heat and election activities significantly impacted showroom footfalls, resulting in an 18 per cent drop in walk-ins. Additionally, high inventory levels and market liquidity issues strained dealership profitability, further compounded by uncertainties related to the elections, which delayed customer purchase decisions.

Looking ahead, the industry faces several challenges, including intense competition, a lack of new model launches, and poor marketing efforts by OEMs. Weather extremes, such as heatwaves and heavy rains, are also concerns. Despite these challenges, post-election stability and continuity in government are expected to boost infrastructure projects and economic activities. The India Meteorological Department's (IMD) forecast of above-normal rains is anticipated to enhance rural demand and support economic activities.

FADA President Manish Raj Singhania expressed cautious optimism, acknowledging the sector's resilience despite mixed results and significant challenges. Dealers remain hopeful for better supplies and positive movements in key sectors, but addressing ongoing challenges will be crucial for sustained improvement in the automotive market.

FADA Bikes

An online survey of FADA members revealed mixed sentiments. Regarding liquidity, 44.51 per cent of respondents rated it as neutral, 29.12 per cent as bad, and 26.37 per cent as good. Sentiment towards the market was similarly mixed, with 45.60 per cent feeling neutral, 29.12 per cent viewing it as bad, and 25.27 per cent as good. Expectations for June 2024 were varied, with 42.86 per cent of respondents expecting growth, 42.31 per cent anticipating flat performance, and 14.84 per cent predicting a decline.

In May 2024, total vehicle sales reached 20,89,603 units, up from 20,36,528 in May 2023, reflecting a 2.61 per cent YoY growth. Additionally, motor vehicle road tax collection increased by 10.9 per cent YoY, indicating a positive fiscal impact from vehicle sales.

Car Sales May 2024
Car Sales FADA May 2024
Car Sales
Auto Sales