Passenger, commercial vehicle registrations fall in August as floods, rainfall disrupt sales

Registrations of passenger as well as commercial vehicles fell last month with excess rainfall, floods disrupting retail sales in several states in the local market.

While passenger vehicle sales declined by 4.5% to 309,053 units, commercial vehicle retails slid 6.05% to 73,253 units on back of weather-related disruptions and weak industrial demand.

Overall, vehicle registrations across categories rose by about 3% to 1,891,499 units in August on back of demand for two-wheelers and three-wheelers, which grew by 6.3% to 1,338,237 units and 1.6% to 105,478 units, respectively.


Federation of Automobile Dealers’ Association (FADA) President Manish Raj Singhania said, “This monsoon season brought unpredictable weather, starting with extreme heat waves which delayed monsoon and transitioned into heavy rainfall, leading to flood-like conditions in several areas. These weather anomalies have had a direct impact on India's auto retail market, which registered a modest YoY growth of just 2.88% in August.”

In the two-wheeler segment while sales grew over last year, sequentially retails fell 7.29%, largely due to excessive rains and flooding, which disrupted demand across various regions. Singhania said many customers postponed their purchases, anticipating new product launches, while others deferred due to market saturation and changing preferences. “Limited marketing efforts from OEMs (Original Equipment Manufacturers) and subdued market sentiment further impacted sales”, he said.

In the passenger vehicle segment, consumer sentiments remained weak. Singhania informed, “Even with the arrival of the festive season, the market remains under significant strain due to delayed customer purchases, poor consumer sentiment and persistent heavy rains.”

Inventory levels are high, with stock days now stretching to 70-75 days and inventory totalling 7.8 lakh vehicles, valued at Rs.77,800 crore. Dealers are concerned that rather than responding to the situation, carmakers continue to increase dispatches to dealers on a month-on-month basis, further exacerbating the issue. FADA has called upon banks and NBFCs to intervene and immediately control funding to dealers with excessive inventory. Dealers must also act swiftly to stop taking on additional stock to protect their financial health. OEMs, too, must recalibrate their supply strategies without delay, or the industry faces a potential crisis from this inventory overload, FADA said.

Singhania cautioned, “If this aggressive push of excess stock continues unchecked, the auto retail ecosystem could face severe disruption.”

Heavy rains, floods, landslides, which have severely impacted market activity hit sales of commercial vehicles in August. In addition to this, reduced construction activity and sluggish demand in industrial sectors strained sales. “The CV segment continues to struggle, facing pressure from steep discounting by competitors, which has only intensified the decline. Weak sentiment, coupled with inventory and cash flow challenges, continues to affect the industry overall”, he said.

Dealers are cautiously optimistic of demand picking up in the upcoming festive season. Singhania said continued heavy rains could negatively affect rural sales, as reduced agricultural output may lead to diminished purchasing power. Additionally, the Shraddh period in September, regarded as an inauspicious time for purchases, is expected to pause sales for some time.

On the positive side, he said, the upcoming festivals, such as Ganesh Chaturthi, Onam and Navratri, are expected to boost consumer sentiment, especially in urban areas. “Moreover, favourable rainfall in certain regions has improved agricultural prospects, which could enhance purchasing power in rural areas as the monsoon subsides. In the CV segment, increasing demand for iron ore, steel transport, and tippers offers a potential lift, supported by new model launches and marketing efforts from OEMs”, Singhania said.