Retail Car Sales Drop In May Amid Heatwave, Elections

Car sales at dealerships fell in May as buyers chose to stay away from showrooms amid a heatwave and Lok Sabha elections.

Retail sales of passenger vehicles—measured as registrations on the government’s Vahan portal—fell 1% year-on-year to 3,03,358 units in May 2024, as against 3,35,123 units in the year-ago period, according to a statement by the Federation of Automobile Dealers Association on Monday. It was down nearly 10% from a month earlier.

While bookings and production weren’t a concern, what hurt incremental demand was the lack of new cars, intense competition, and poor marketing efforts by carmakers, FADA President Manish Raj Singhania said. Customers also delayed purchases while awaiting the election outcome. Walk-ins at showrooms dropped by about 18% due to the extreme heat.

Liquidity issues and high inventory levels continue to strain profitability for dealerships,” Singhania said. “Although discount schemes and good product availability are in place, low customer inquiries and postponements due to seasonal factors remain concerns.”

Overall, retail auto sales witnessed a marginal uptick last month, on the back of a resurgence in demand for three-wheelers. As many as 20,89,603 vehicles were registered in May 2024, as against 22,06,070 units a year ago—an annual increase of 2.61%, the FADA data showed. Sequentially, however, retail auto sales dipped 5.28%.

PV retail sales at 3.03 lakh units, down 1% YoY

CV retail sales at 83,059 units, up 4.1% YoY

2W retail sales at 15.3 lakh units, up 2.5% YoY

3W retail sales at 98,265 units, up 20.09%

Singhania is “cautiously optimistic” about incoming demand.

“The formation of a continued government could boost infrastructure projects and economic activities. Dealers are hopeful about better supplies and positive movement in key sectors like cement, coal, and iron ore,” he said. “The India Meteorological Department has forecast above-normal rains at 106% of the long-period average this year, which is expected to enhance rural demand and support economic activities.”

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