India's Auto Retails Grow 2.61% On Year In May

According to the Federation of Automobile Dealers Associations (FADA), in May 2024, the Indian Auto Retail sector achieved a modest 2.61% Y-o-Y growth. The two-wheeler (2W), three-wheeler (3W) and commercial vehicle (CV) segments grew by 2.5%, 20% and 4% while passenger vehicle (PV) and tractor (Trac) were in red by 1% each Y-o-Y.

The two-wheeler segment grew by 2.5% Y-o-Y but declined by 6.6% M-o-M. Dealers reported supply constraints, lack of OEM marketing activities and impacts from extremely hot weather and elections. Positive rural demand due to expected good monsoon and improved finance availability were also noted which kept the counters ticking.

The PV segment showed -1% Y-o-Y and a -9.5% M-o-M decline. Dealers cited the impact of elections, extreme heat and market liquidity issues as major factors. Despite better supply, some pending bookings and discount schemes, the lack of new models, intense competition and poor marketing efforts by OEMs affected sales.

The CV segment showed a 4% Y-o-Y growth but an -8% M-o-M decline. Dealers reported that elections and extreme climatic conditions heavily impacted sales. Despite growth due to a low base from last year and increased bus orders, the industry faced challenges from wholesale pressures, government policy effects, and negative market sentiment.

Overall, while the auto retail sector saw mixed results, the industry is navigating through significant challenges with cautious optimism for the coming months, FADA said.

The near-term outlook for the Automobile Retail is cautiously optimistic, influenced by a mix of positive and challenging factors across various segments. Post-election results are expected to bring stability and improve market sentiment, while the formation of a continued government could boost infrastructure projects and economic activities.

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