LS polls, extreme heat drag passenger vehicle sales down by 1% in May | Auto


During the month of May, 1.53 million two wheelers were sold versus 1.49 million last year | Photo: Shutterstock

Extreme heat and elections, which resulted in an 18 per cent dip in showroom footfall, has pulled down passenger vehicle (PV) and tractors sales marginally by 1 per cent each in the month of May, compared to the same time last year. 

In contrast, two-wheelers (2W) sales were up by 2.5 per cent, three-wheelers (3W) by 20 per cent, and commercial vehicles (CV) by 4 per cent, during the period under review.

Overall, in May 2024, the Indian auto retail sector achieved a modest 2.61 per cent year-on-year growth, said data shared by the Federation of Automobile Dealers Associations (FADA).

The PV segment showed 1 per cent year-on-year and a 9.5 per cent month-on-month decline.

“In absolute numbers, this decline is only 3,000 vehicles out of the total 3,03,358 PVs sold in May. Dealers cited the impact of elections, extreme heat and market liquidity issues as major factors,” said Manish Raj Singhania, president of FADA.

“Despite better supply, some pending bookings and discount schemes, the lack of new models, intense competition and poor marketing efforts by OEMs affected sales.

Additionally, increased customer postponements and low enquiries further contributed to the challenging market conditions. Due to the extreme heat, the number of walk-ins to showrooms dropped by around 18 per cent,” he added. 

The CV segment showed a 4 per cent Y-o-Y growth but an 8 per cent M-o-M decline.

Dealers reported that elections and extreme climatic conditions heavily impacted sales. Despite growth due to a low base from last year and increased bus orders, the industry faced challenges from wholesale pressures, government policy effects, and negative market sentiment. Additionally, good movement in market loads, cement, iron ore, and coal sectors contributed positively. CV sales were seen at 83,059 units compared to 79,807 last year. 

Despite elections, the two-wheeler segment grew by 2.5 per cent YoY but declined by 6.6 per cebt MoM.

“Dealers reported supply constraints, lack of OEM marketing activities and impacts from extremely hot weather and elections. Positive rural demand due to expected good monsoon and improved finance availability were also noted which kept the counters ticking,” Singhania added.

During the month of May, 1.53 million two wheelers were sold versus 1.49 million last year. 

“The near-term outlook for the Automobile Retail is ‘cautiously optimistic’, influenced by a mix of positive and challenging factors across various segments. Post-election results are expected to bring stability and improve market sentiment, while the formation of a continued government could boost infrastructure projects and economic activities. Dealers are hopeful about better supplies and positive movement in key sectors like cement, coal and iron ore,” the FADA president said. 

The India Meteorological Department (IMD) has forecast above-normal rains at 106 per cent of the long-period average (LPA) this year, which is expected to enhance rural demand and support economic activities.

However, extreme weather, such as heatwaves and heavy rains, along with the reopening of schools in July, might delay purchase decisions, FADA indicated.

However, despite these positive indicators, challenges persist, including intense competition, lack of new model launches and poor marketing efforts by OEMs.

Liquidity issues and high inventory levels continue to strain profitability for dealerships.

“Although discount schemes and good product availability are in place, low customer enquiries and postponements due to seasonal factors remain concerns. Uneven monsoon rains have previously impacted farm sector growth and while this year’s above-normal forecast is promising, it raises the risk of possible floods in some regions, potentially disrupting the market,” he said. 

First Published: Jun 10 2024 | 12:25 PM IST

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