The Indian auto retail sector witnessed a double digit development of 13.84% Yr on Yr (YoY) in July 2024 backed by a sturdy 17.17% YoY development in Two-Wheelers (2W) gross sales. Nevertheless, excessive stock pile-ups at dealerships have brought about ‘important’ concern.
In the course of the month Three-Wheelers (3W) gross sales elevated by 12.88% YoY, Passenger Car (PV) rose 10.18% YoY and Business Automobiles (CV) grew 5.93% YoY. However Tractors gross sales noticed a big YoY decline of 11.95% in line with gross sales numbers launched by Federation of Car Sellers Associations (FADA).
“This development is accompanied by a big concern. Stock ranges have surged to a historic excessive of 67-72 days, equating to Rs 73,000 crore price of inventory. This poses a considerable danger for seller sustainability, necessitating excessive warning,” FADA mentioned.
FADA has urged PV OEMs to be vigilant about potential seller failures resulting from these excessive stock ranges. “It is usually essential for the Reserve Financial institution of India to mandate monetary establishments to implement stringent checks earlier than releasing stock funding, ideally requiring seller consent or collaterals to forestall the escalation of NPAs,” the auto sellers’ physique mentioned in a press release.
“Following a poor June, monsoons in India have intensified, leading to above-normal cumulative rainfall for July. Nevertheless, the geographical distribution was uneven. Regardless of these challenges, India’s car retail sector noticed a YoY development of 13.84%, with virtually all classes witnessing a rise,” mentioned C S Vigneshwar, Vice President, FADA.
On the close to time period outlook FADA mentioned, “The auto retail market is cautiously optimistic for the close to time period, pushed by constructive monsoon results, the festive season, and a few product introductions.”
