PV retails dip 5% in August; FADA raises alarm over rising inventory level

Passenger vehicle retail sales in India witnessed a 5 per cent on-year decline in August on account of delayed customer purchases, poor consumer sentiment and persistent heavy rains, industry body FA said on Thursday.

overall passenger vehicle (PV) registrations last month stood at 3,09,053 units, as compared to 3,23,720 units in August 2023.

"Even with arrival of festive season, market remains under significant strain... Inventory levels have reached alarming levels, with stock days now stretching to 70-75 days and inventory totalling 7.8 lakh vehicles, valued at an alarming Rs 77,800 crore," Federation of Automobile Dealers Associations (FA) President Manish Raj Singhania said in a statement.

Rar than responding to situation, PV Original Equipment Manufacturers (OEMs) continue to increase dispatches to dealers on a month-on-month basis, furr exacerbating issue, he ded.

"FA urgently calls upon all banks and NBFCs to intervene and immediately control funding to dealers with excessive inventory," Singhania said, ding that dealers must also act swiftly to stop taking on ditional stock to protect ir financial health.

OEMs, too, must recalibrate ir supply strategies without delay, or industry faces a potential crisis from this inventory overlo, he said.

"If this aggressive push of excess stock continues unchecked, auto retail ecosystem could face severe disruption," Singhania said.

Commercial vehicle registrations saw a 6 per cent year-on-year dip in August, while tractor retail sales also witnessed a drop of 11 per cent as compared to year-ago period.

Two-wheeler sales, however, increased 6 per cent year-on-year to 13,38,237 units in August, as compared to 12,59,140 units in same month last year, on back of improved stock availability and onset of festive season, Singhania said.

Three-wheeler retail sales also increased by 2 per cent to 1,05,478 units last month, as compared to 1,03,782 units in year-ago period.

Overall registrations last month saw an increase of 3 per cent year-on-year at 18,91,499 units, as against 18,38,501 units in August last year.

On business outlook in near term, FA said it remains cautiously optimistic. While festive season and improved rural demand present promising opportunities for growth, ongoing wear uncertainties and high inventory levels may temper overall recovery, it stated.

To navigate se challenges, strategic inventory management and targeted marketing initiatives will be crucial in maximising festive sales and mitigating risks from verse wear conditions, it ded.