Auto retail sales drop 7% in February amid slowing demand: FADA

Automobile retail sales in India witnessed a significant decline of 7% in February 2024, reflecting a broad-based slowdown in demand across all vehicle categories, according to data from the Federation of Automobile Dealers Associations (FADA).

Total retail sales in the domestic market stood at 18,99,196 units, down from 20,46,328 units in February 2023.

FADA President C S Vigneshwar highlighted growing concerns among dealers regarding excess inventory being pushed to them without consent. "While such initiatives may serve broader business objectives, it is critical to align wholesale allocations with genuine demand to protect dealer viability and ensure healthy inventory management," he stated.

Passenger Vehicles Hit Hard

The passenger vehicle (PV) segment recorded a 10% year-on-year drop, with retail sales falling to 3,03,398 units in February. Dealers reported weak market sentiment, particularly in the entry-level segment, along with delayed conversions and challenging sales targets. Vigneshwar urged OEMs to avoid overburdening dealerships with excessive stock, as inventory levels remained between 50-52 days.

Two-Wheeler Sales Decline 6%

The two-wheeler segment saw a 6% year-on-year drop, with 13,53,280 units sold in February compared to 14,44,674 units in the same month last year. Dealers cited multiple challenges, including inventory imbalances, aggressive pricing adjustments, weak consumer sentiment, lower enquiries, and limited finance availability. Urban markets experienced a sharper decline than rural areas.

Commercial Vehicle & Tractor Sales Also Down

Commercial vehicle retail sales fell 9% YoY to 82,763 units, impacted by weak transportation demand, stricter financing norms, and pricing pressures.

Tractor sales declined 14.5% YoY to 65,574 units, reflecting slower rural demand and economic pressures.

Cautious Optimism for March

FADA remains cautiously optimistic about March sales, citing potential support from upcoming festivals like Holi, Gudi Padwa, and Navratri, along with year-end depreciation benefits. However, concerns persist due to weak stock market trends, reduced discretionary spending, and declining investor sentiment.

Despite short-term challenges, dealers are hopeful for a market recovery driven by seasonal demand and improved consumer sentiment.