Auto retail sales in India grew by an impressive 14 percent in July over a year ago, supported by enhanced demand from rural markets aided by good monsoons and new product launches at the dealer’s end.
According to the Federation of Automobile Dealers Associations (Fada), even as passenger vehicles have seen an increase of 10% over this period, inventory levels in PVs are at a new high, with stock holding days reaching almost historically high levels s-67 -72 days-in both two-wheelers and passenger vehicles estimated worth of Rs 73,000 crore.
A threat to the business sustainability of OEMs. The stock in July 2023 was only available for 50-55 days, which amounts to a stock of Rs. The stock was Rs 60,000 crore in June 2024, and inventory became days from between 62 to even up to 67.
So, a market that is doing well. Our club-wagging concern remains inventory, which has never been higher. This is something that we are calling out to our original equipment manufacturer (OEM) partners. Earlier, inventory pile-ups were reported for small cars but now the phenomenon is being observed by Fada across segments, including sport utility vehicles,” said C S Vigneshwar, vice president of Fada.
Growth in Different Auto Retail Sales Segments
Leading the upswing in July auto retail sales numbers was a massive double-digit growth for two-wheelers (2W) at 17 percent, followed by PVs (+10 percent), three-wheelers (+13 percent), and CVs, which were back to positive territory with a solitary +6 percent uptick. But tractors remained weak and showed a 12 percent Y-o-Y decline.
Economically, there as a result of the previous crisis, similar auto retail sales recorded higher with an increase equivalent to 7.3 percent year over year in sequence. Sales were up 0.73 percent Y-o-Y in June.
Sales Figures
| Segment | July 2024 | Y-O-Y % chg |
| 2W | 1,443,463 | 17.7 |
| 3W | 110,497 | 12.88 |
| PVs | 320,129 | 10.18 |
| Tractor | 79,970 | -11.94 |
| CV | 80,057 | 5.93 |
| Total | 2,034,116 | 13.84 |
Inventory Levels and Stock Value
| Inventory Days | Stock Value | |
| Jul 24’ | 67- 72 | 73,000 |
| Jun 24’ | 62-67 | 60,000 |
| Jul 24’ | 50-55 | 49,833 |
Impact of Rural Economy and Government Programs: Auto Retail Sales
The 2W segment performed well, driven by a vibrant rural economy supported by a healthy monsoon and beneficial government agri-oriented programs boosting the income levels in the countryside.
Vigneshwar added that this was also due to the introduction of products, along with better stock availability, despite market slowdowns in some regions and adverse weather conditions such as heavy rainfall taking a toll on consumer spending amid heightened competition.
Performance of Electric Vehicles and Key Players
Likewise, EVs also noticed profits because of offers and the cease date approaching for the Electric Mobility Promotion Scheme. All players and companies in the 2W segment had shown better growth except one of the market leaders, Hero Moto Corp (10 percent), HMSI (23 per to June) TVS Motor Company Ltd.
Passenger Vehicles and Dealer Challenges
The report said PV sales continued to register impressive growth on the back of new models and discounted pricing strategies.
Dealers reported benefits from good product availability, attractive schemes, and a wider range of products. However, poor consumer sentiment and severe competition were headwinds against heavy rains.
A small number of others kept up auto retail sales with deep promotions and incremental discounts,” he said. But Fada warned the PV OEMs to be cautious of increasing dealer failures on account of high inventory levels.
Auto Retail Sales GST Council and RBI Recommendations
Fada said as important it was for the GST council to reconsider this, it is equally pertinent that the Reserve Bank of India makes inventory funding conditional on stringent checks and, if possible, dealer consent or collateral from the manufacturer side so that non-performing assets do not further escalate.
Commercial Auto Retail Sales and Dealer Sentiments
CV retail sales grew by 6 percent Y-o-Y, and dealers’ sentiment was reported to be mixed. On the positive side, it said construction and mining sectors continued to grow although challenges like rained out weeks in monsoon season wetting down market sentiment across rural pockets, negative sentiment at large due scarcity of finances and high vehicle prices post BS6.
A few dealers managed to report an increase in sales numbers by maintaining small bulk deals and catching the headwind of growing market penetration for their models.
Impact of Monsoons and Agricultural Activity
Vigneshwar also said that after a deficient June. Monsoons have picked up in the country, thereby leading to above-normal July rainfall for India taken together. But, it was not uniform as Southern and Central India received excess rain with 10 meteorological divisions ending up in double-digits deficit.
Sowing of kharif crops has gone up by 2.3 per cent over last year, but this immediately gives a somewhat misleading impression because there was an extremely low base for sowing in the previous season due to El Niño disturbances. The sowed area is 2.4 per cent less this year as compared to last year in July 2023, he said.
FAQs
Q: Auto retail sales in India grew at which rate YoY growth in July?
Offtake for the auto segment grew 14 percent YoY in July, with strong traction from rural markets and new product launches, which translated into better growth, as led by Maruti’s continued run on successful models.
Q: What has been the inventory status for Passenger vehicles & 2-wheelers?
The inventory levels for passenger vehicles and two-wheelers are at a historic high with stock holding days. Ranging from 67 to 72 days, amounting up to Rs73,000 crore of unsold BS-IV products.
Q: What segment had the record high in terms of growth rate for auto retail sales in July?
The two-wheeler segment continued to grow the most in July. At 17 percent growth followed by passenger vehicles and commercial vehicles (10%). Each three-wheeler is up 13% during this peak dueMEvsr0dFY.
Q: Why did the two-wheeler segment post a positive performance?
The healthier performance of the two-wheeler segment was due to a relatively stronger rural economy. More allied demand generation with government agricultural programs and fresh product launches.
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