Passenger vehicle sales dip 7% in June as heatwave curtails showroom visits

New Delhi: Passenger vehicle retail sales in India witnessed a 7 per cent on-year decline in June as severe heatwave conditions resulted in 15 per cent less showroom walk-ins, industry body FADA said on Friday.

Overall passenger vehicle registrations stood at 2,81,566 units last month, as compared to 3,02,000 units in June 2023.

"Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to extreme heat resulting in 15 per cent less walk-ins and delayed monsoons," the Federation of Automobile Dealers Associations (FADA) President Manish Raj Singhania said in a statement.

Dealer feedback highlights challenges such as low customer inquiries and postponed purchase decisions, he added.

Singhania also highlighted that inventory levels of passenger vehicles have reached an all-time high, ranging from 62 to 67 days.

With the festive season still some time away, it is crucial for passenger vehicle Original Equipment Manufacturers (OEMs) to exercise caution, he stated.

Effective inventory management strategies are essential to mitigate financial strain from high interest costs, Singhania stated.

"FADA strongly urges passenger vehicle OEMs to implement prudent inventory control and engage proactively with the market," he added.

Two-wheeler registrations rose 5 per cent year-on-year to 13,75,889 units in June.

Factors such as extreme heat resulted in 13 per cent less walk-ins by probable customers in showrooms, Singhania said.

Stalled monsoon and election-related market slowdowns particularly affected rural sales, which fell from 59.8 per cent in May to 58.6 per cent in June, he added.

Commercial vehicle sales dropped 5 per cent to 72,747 units last month, from 76,364 units in June 2023.

"The industry continues to face de-growth, impacted by high temperatures affecting the agricultural sector and infrastructural project slowdowns," Singhania stated.

Tractor sales last month declined 28 per cent year-on-year to 71,029 units in June.

While three-wheeler registrations rose 5 per cent to 94,321 units in June, as compared to 89,743 units in the year-ago month.

Overall retail sales rose marginally year-on-year to 18,95,552 units in June.

On the business outlook, FADA stated that for two-wheelers, the arrival of the monsoon is expected to provide a boost, although challenges such as agricultural cash flow constraints and regional market variations remain.

In the passenger vehicle segment, high inventory levels and ongoing low market sentiment necessitate cautious management, the industry body said.

Meanwhile, the commercial vehicle sector looks forward to potential growth driven by renewed infrastructure projects and seasonal demands, despite current slowdowns, it said.

"Based on current market conditions, the overall rating for July auto retail performance is cautiously optimistic with a moderate outlook," FADA, which represents over 30,000 dealership outlets, stated.

It stated that vehicle registration data for the month was collated from 1,567 out of 1,700 RTOs across the country.