Passenger vehicle sales drop 11% YoY, but up 4% MoM on monsoon revival

Registration of new passenger vehicles (PVs) dropped as much as 11 per cent in July to 243,183 units, from 274,772 units a year ago, according to the Federation of Automobile Dealers Associations (FADA). But the sales were 7 per cent more than June this year when 228,198 new PVs were registered.

Two-wheeler sales, too, reported a 5 per cent drop year-on-year to 1,332,384 units from 1,403,382 units; it was, however, 4 per cent more than sales in June this year (1,278,254 units). 

Commercial vehicle (CVs) sales were also in the red in July, reporting a 14 per cent drop to 23,118 units, as against 26,815 units a year ago. Month-on-month, CV sales dropped 19 per cent.

FADA president Ashish Harsharaj Kale said consumer sentiment and the overall demand remained weak across all segments and most geographies. Some improvements in month-on-month numbers were mainly due to the revival of the monsoon bringing positivity among consumers, and June presenting a low volume base (it was the lowest since February this year), he noted.

Source: FADA
Consumer sentiment was weak in June because of a sluggish monsoon, which finally picked up pace in July, Kale said. About inventory, Kale said that for PVs, it is “very close” to the FADA-suggested 21 days of inventory. But for CVs, it remains at a “high level” because the segment, unlike PVs and two-wheelers, remained weak even month-on-month.

The average inventory for PVs currently ranges from 25 days to 30 days; it was 30-35 days in June. The inventory for two-wheelers remained flat at 60-65 days’ level. Dealers have requested the two-wheeler industry to keep it at a three-week level.

The average inventory for CVs, too, stayed at the June level of 55-60 days. 

With the weakness in the overall demand, especially in the CV space, the current inventory is a worry for dealers in view of the transition to BS-VI only six months away, he said. The transmission of liquidity and interest rate cuts is still not visible in retail lending, while confusion in consumers’ mind with regards to electric vehicle and BS-VI is leading to a delay in buying decisions, the FADA president said. He also blamed floods in some states for the slowdown in vehicle sales.

But he appeared optimistic. “The prime minister is himself leading the efforts for growth and demand revival. He recently gave a strong and positive statement for the auto industry, putting to rest the confusion over co-existence of internal combustion engines and EVs,” said Kale.

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