Indian auto retail sector sustains 10% YoY growth in July, 3-Wheeler segment shines with 74% surge: FADA report

The Federation of Automobile Dealers Associations (FADA) recently released its report on July's vehicle retail data, providing insights into the performance of various segments in the automotive industry.

According to the report, despite the challenging economic conditions, the auto retail sector continued to showcase resilience, maintaining a steady 10 per cent year-on-year (YoY) growth in July, mirroring the previous month's figures.

Encouragingly, all vehicle categories reported positive growth numbers during this period. Two-wheelers (2W) witnessed an eight per cent YoY increase, Three-Wheelers (3W) experienced a remarkable surge of 74 per cent, Passenger Vehicles (PV) showed a four per cent growth, Tractors (Trac) demonstrated a healthy 21 per cent expansion, and Commercial Vehicles (CV) held steady with a two per cent YoY growth.

However, when analyzing the monthly performance, a mixed trend emerged. While the year-on-year growth was consistent, there was a five per cent decline in retail sales on a month-on-month (MoM) basis, as per the report. Notably, the 3W segment stood out with a notable nine per cent MoM growth, but the 2W, PV, and Trac segments faced reductions of six per cent, four per cent, and eight per cent, respectively. CVs experienced a marginal dip of -0.2 per cent, closing almost flat.

In comparison to pre-COVID levels, overall retail sales registered a 13 per cent decline, indicating the lingering impact of the pandemic on the automotive sector. Specifically, the 2W segment struggled with a significant 23 per cent dip, while CVs also faced challenges with a four per cent contraction.

One notable highlight was the impressive performance of the Three-Wheeler segment. July witnessed an all-time high sale of 94,148 units, showcasing a remarkable 74 per cent YoY and nine per cent MoM growth, signaling a positive market sentiment in this category.

The report also shed light on inventory levels for Passenger Vehicles, which have surpassed the 50-day mark and currently stand between 50-55 days. This indicates an inventory build-up in anticipation of the upcoming festive season when demand typically surges.

However, a note of caution arises from the Indian Meteorological Department's (IMD) prediction of below-average rainfall in August. The potential reduced yields of kharif crops could dampen the immediate resurgence of rural demand, posing a challenge for the automotive industry.

Despite the short-term uncertainties, FADA remains optimistic about retail growth prospects, especially with the festive season approaching. The industry continues to adapt and innovate, striving to navigate through these challenging times and work towards a brighter future in the Indian automotive market.