Vehicle Retail Slips in July Despite Rural Gains, Festive Hopes: FADA

Pune: Passenger vehicle sales, the barometer of the economy, dropped marginally year-on-year to 3,28,613 units in July, as against 3,31,280 units in the same month last year.

However, automobile retail sales declined 4 per cent year-on-year last month amid drop in demand for passenger vehicles and two-wheelers, Federation of Automobile Dealers Associations or FADA said on Thursday.

Overall registrations dropped to 19,64,213 in July, as compared to 20,52, 759 units in July 2024. This was due to a high-base effect in July 2024, FADA noted.

It said that while auspicious delivery days, plus targeted schemes and rural marketing, drove hinterland volumes, urban demand stayed muted due to restrained customer sentiment.

With inventory levels steady at around 55 days, calibrated discounting, streamlined finance facilitation and intensified urban outreach will be crucial for sustaining festive-season growth, FADA pointed out.

Two-wheeler registrations saw a decline of 6 per cent year-on-year to 13,55,504 units in July as crop-sowing activities and prolonged heavy rains dampened rural footfalls more sharply than urban demand.

Dealers are nevertheless confident of a post-monsoon uptick, with several purchase decisions deferred to August ahead of the festive season, making strategic stock alignment and focused rural - urban engagement imperative for reviving momentum, FADA stated.

In a sweet spot, commercial vehicle retail sales grew marginally to 76,439 units last month, as compared to 76,261 units in the year-ago period.

Dealers cited new-model launches, aggressive marketing support, bulk institutional orders and timely stock availability as key drivers, alongside targeted schemes that bolstered school-bus volumes, FADA noted.

“On business outlook, the monsoon prediction of fairly good rains through September appears broadly supportive,” said FADA President CS Vigneshwar.

He said India is projected to receive normal to above-normal rainfall (around 106 per cent of the long-period average), which should bolster crop prospects and rural liquidity, albeit with heightened localized flood and landslide risks in select eastern, northeastern and peninsular pockets.

"However, external headwinds have emerged as the US administration's imposition of an additional 25 per cent tariff on Indian exports has precipitated a 0.4 per cent dip in benchmark equity indices and a depreciation of the rupee, injecting volatility into financial markets," Vigneshwar said.