IGI Logo

Federation of Automobile Dealers Association (FADA) has stated that the Indian Auto Retail sector achieved a modest 2.61% year-on-year (YoY) growth in May 2024. Sales of two-wheeler (2W) increased 2.5% YoY, three-wheeler (3W) rose 20% and commercial vehicle (CV) segment grew 4%, while passenger vehicles (PV) and tractor segment both saw a contraction of 1% each YoY. It noted that the two-wheeler segment grew by 2.5% YoY but declined by 6.6% 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. 

FADA further stated that the PV segment showed 1% YoY and a 9.5% month-on-month (MoM) decline. Dealers cited the impact of elections, extreme heat and market liquidity issues as major factors. 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%. It added that the CV segment showed a 4% YoY growth but an 8% MoM 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.  

According to the FADA, 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.