FADA Report: As soon as the month of September arrives, the auto market starts looking particularly buzzing with the influx of customers, but this time, as usual, there is no enthusiasm on the faces of vehicle sellers, nor is there a sight of excitement in the market due to the movement of customers like before. The main reason behind this is believed to be the slowdown in the auto market as compared to last year. Recently, a report released by the industry body FADA has revealed many reasons. In which passenger vehicle retail sales in India have registered a 5 percent annual decline in the month of August. The main reason behind this has come to the fore, such as the consumer’s decreasing desire to buy a vehicle and the life of the people getting affected by continuous heavy rains in many areas, delay in purchase by customers.
What does the President of Federation of Automobile Dealers Association say
Manish Raj Singhania, President, Federation of Automobile Dealers Associations (FADA) said in a statement, “Despite the festive season approaching, the market is under tremendous pressure. Inventory levels have reached alarming levels, with stock days now rising to 70-75 days and inventory totalling 7.8 lakh vehicles, worth a worrying Rs 77,800 crore.” Elaborating on the subject, he said that instead of responding to the situation of declining vehicle sales, passenger vehicle OEMs keep increasing the sales pressure on dealers month after month, which has aggravated the problem. He said that instead of reacting to the situation, PV original equipment manufacturers (OEMs) are increasing the number of goods being dispatched to dealers on a month-on-month basis.
The need for strategic inventory management and targeted marketing
At the same time, FADA maintains a cautiously optimistic outlook on business prospects in the near future. The festive season and improved demand for vehicles from rural areas are showing promising signs for sales growth this time. But at present, many factors such as deadly rains in many areas and high inventory levels are playing their role in reducing the overall improvement. To face these challenges, strategic inventory management and targeted marketing initiatives can prove effective in maximizing festive sales and minimizing risks from adverse weather conditions.
Appeal to dealers to take quick action to stop taking excess stock
Singhania said, “Dealers should also act swiftly to stop taking overstock of vehicles from manufacturers to safeguard their financial health. Along with this, OEMs also need to improve their supply methods with immediate effect. Otherwise, the auto industry may face the challenge of inventory overload very soon. Singhania said, “If this aggressive pressure of excess stock continues unchecked, the auto retail ecosystem may face serious disruption.” FADA has also appealed to all banks and NBFCs to intervene immediately and control the funding given to dealers with excessive inventory.” He said that instead of reacting to the situation, PV original equipment manufacturers are pressuring dealers to keep more stock than required on a month-to-month basis. Due to which the problem in front of the dealers is becoming very difficult.
Three wheeler retail sales also increased by 2 percent last month
If we talk about three wheeler retail sales, it also increased by 2 percent in August last month. Which reached 1,05,478 units as compared to 1,03,782 units year-on-year. Total registrations last month increased by 3 percent year-on-year. Which reached 18,91,499 units as compared to 18,38,501 units in August last year.
Commercial vehicle registrations declined 6 percent year-on-year in August
Commercial vehicle registrations in the Indian market declined by 6 percent year-on-year in August. At the same time, tractor retail sales also declined by 11 percent year-on-year. However, two-wheeler sales grew by 6 percent year-on-year in August. Which crossed the figure of 13,38,237 units as against 12,59,140 units in the same month last year. The reason behind this increase is many reasons like better stock availability as per the needs of the customers at the beginning of the festive season. While looking at the total registration of passenger vehicles last month, it stood at 3,09,053 units, which has decreased as compared to 3,23,720 units in August 2023.
