Retail sales of passenger vehicles rose 4% year-on-year to 2,84,064 units in July but fell 3.8% when compared with the previous month, according to data released by the Federation of Automobile Dealers Associations. PV sales in June stood at 2,95,299 units.

The month saw a surge in orders and timely OEM supplies, especially with the introduction of new products, says FADA president Manish Raj Singhania.

However, severe monsoons and flood-like situations, especially in North India, impacted sales, Singhania says, adding that SUVs continued to remain a popular choice.

The inventory for passenger vehicles surpassed the 50-day mark and currently hovers between 50 and 55 days, suggesting an inventory build-up in anticipation of the forthcoming festive season, the dealers' lobby says.

Overall auto retail sales in July maintained a steady 10% year-on-year growth, mirroring the previous month. Despite the consistent Y-o-Y growth, the month-on-month trend observed a 5% decline, highlighting short-term slowdowns.

On a Y-o-Y basis, segments like two-wheelers, three-wheeler, PV, tractors, and commercial vehicles grew at rates of 8%, 74%, 4%, 21%, and 2%. On a month-on-month basis, except 3W's 9% growth, other segments declined. Compared to pre-Covid figures, auto retail sales fell 13%, with a significant 23% and 4% drop in two-wheelers and commercial vehicles, respectively, the survey shows.

"Despite challenges like heavy monsoons and a tilt towards EVs due to high fuel prices, 2W showed resilience in July '23, with increased demand," says Singhania.

The three-wheeler segment's record numbers indicate industry potential and a growing EV interest, he says. Yet, addressing issues like OEM support and dealer engagement remains crucial, he adds.

FADA is hopeful about retail growth prospects, especially with the festive season on the horizon. "The automotive industry is poised for an intriguing August, marked by a blend of opportunities and challenges. Across the board, there are common positive indicators echoing hope," says FADA.

"The 2W sector expects an uptick, driven by upcoming festivals, a harmonious supply-demand equilibrium and the rollout of new models. The 3W category, too, is witnessing a surge in interest, particularly towards electric variants. In the realm of CV, the anticipation of the festive season, the aftermath of a good monsoon and pent-up demand set the stage for potential growth. Similarly, the PV segment is likely to benefit from festive euphoria and new product introductions coupled with high demand in SUV category," it says.

FADA, however, says that challenges loom on the horizon. "The 2W segment's entry-level category continues to be a cause for concern. In the CV space, there are apprehensions regarding streamlined loan disbursements for buyers. Inventory level in PV has breached 50 days mark in anticipation of upcoming festival season and the slowdown in entry level car remains," the dealers' lobby says.

A big concern is the India Meteorological Department's (IMD) projection of below-average rainfall in August, potentially leading to lower crop yields. "This could impact the purchasing power, especially in rural regions. While the industry has experienced a tepid trend over the past two months, FADA remains watchful in the short term. Nonetheless, there's optimism about a rise in retails as we approach the festive season," it says.

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