Passenger, commercial vehicles retail sales skid in August as heavy rains dampen sentiment

Retail sales of passenger and commercial vehicles in India fell in August from a year earlier as excessive rainfall in several states weighed on consumer sentiment and economic activity, worsening woes for automakers.

While passenger vehicle sales fell by 4.5% to 309,053 units, commercial vehicles slid 6.05% to 73,253 units amid weather-related disruptions and weak industrial demand, showed data from the Federation of Automobile Dealers Associations (FADA). Total retail sales determined through vehicle registrations across categories rose by about 3% to 1,891,499 units in August.

This was largely due to higher two-wheeler and three-wheeler sales, which grew by 6.3% and 1.6% to 1,338,237 units and 105,478 units respectively last month.

"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," said FADA president Manish Raj Singhania.

In the two-wheeler segment, while retail sales grew over last year, it fell 7.29% sequentially, largely due to heavy rainfall and flooding, which disrupted demand in various markets.

Singhania said many customers postponed their purchases, anticipating new product launches ahead of the festive season, 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 sentiment remained weak. "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," said Singhania.

Sluggish sales has saddled dealers with high inventory levels, currently stretching to 70-75 days, totalling 780,000 vehicles worth '77,800 crore.