‘Bumpy ride ahead’. Auto retail sector still faces diverse challenges: FADA

New Delhi

The auto retail sector faces diverse challenges across the two-wheeler (2W), commercial vehicle (CV) and passenger vehicle (PV) segments, Federation of Automobile Dealers Associations (FADA), said on Monday.

Manish Raj Singhania, President, FADA said, “For 2W, seasonal factors could boost demand, but concerns like weather-induced walk-in reductions, inventory, and regulatory norms persist. The CV sector anticipates improved vehicle availability but concerns about RDE norms and seasonal effects may impact sales.”

Singhania added, “The PV sector expects increased demand, particularly for new models, compact and full-sized SUVs and electric vehicles (EVs), but inventory pressure and right model availability could pose challenges.”

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Therefore, he urged for a balanced auto retail ecosystem, with collective action to regulate inventory levels, negotiate lower interest rates, and support 2W dealers by eliminating illegal multi-brand sales.

“While acknowledging near-term challenges, FADA maintains a stance of cautious optimism, highlighting the potential for growth through collaborative efforts and alignment with market trends,” Singhania said while sharing the monthly retail sales data for the industry.

MPC impact

The anticipated stable interest rates by RBI’s Monetary Policy Committee could maintain vehicle demand and positively impact auto sales. However, supply chain issues, demand-supply dynamics, and regulatory changes also play a role in shaping the auto retail outlook, Singhania added.

According to FADA’s monthly retail data, the PV retail sales grew by 4.31 per cent year-on-year (y-o-y) to 2,98,873 units in May as compared with 2,86,523 units in the corresponding month last year. Similarly, 2W sales grew by 9.32 per cent y-o-y to 14,93,234 units during the month as against 13,65,924 units in May 2022.

The CV sales grew by more than seven per cent to 77,135 units during the last month as compared with 71,964 units in the corresponding month last year. 3W sales grew the most (78.57 per cent y-o-y) to 79,433 units in May as compared with 44,482 units in May last year, the FADA report indicated.

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Tractor sales also grew by 9.63 per cent y-o-y to 70,739 units during the month as compared with 64,528 units in the corresponding month last year. The grand total of all vehicle retail sales grew by 10.14 per cent y-o-y to 20,19,414 units in May as compared with 18,33,421 units in May 2022.

“May has been an encouraging month for the auto retail industry, demonstrating a robust 10 per cent y-o-y growth across all vehicle categories. We have witnessed a resurgence in the 2W, 3W, PV, tractor, and CV segments... while there has been a slight -2 per cent decline compared to pre-Covid levels, the overall retail figures have shown improvement,” Singhania said.

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