The lobby body noted that consumer sentiment remained low in some regions owing to heavy rains and economic uncertainties.
Dealers are currently facing financial pressure due to high inventory levels and interest costs, even as the market is seeing increased competition and heavy discounting in the PV segment.
Threat for PV segments
PV segment grew 14 per cent year-on-year boosted by new model launches and pricing strategies, the Federation of Automobile Dealers Association said in a press release. However, inventory levels are currently at a historic high of Rs 73,000 crore worth of stock, posing a “substantial risk for dealer sustainability, necessitating extreme caution.”
“FADA urges PV OEMs to be vigilant about potential dealer failures due to these high inventory levels. It is also crucial for the Reserve Bank of India to mandate financial institutions to implement stringent checks before releasing inventory funding, preferably requiring dealer consent or collaterals to prevent the escalation of NPAs,” said C S Vigneshwar, Vice President, FADA.
Two-wheelers grew by 17 per cent while three-wheelers and commercial vehicles grew 13 per cent and 6 per cent each. Tractors underperformed other segments amid above-normal cumulative rainfall with uneven geographical distribution, leading to varying impacts across regions.FADA is ‘cautiously optimistic’ on dealer sentiment in the near-term, owing to new product launches amid concerns around low customer inquiries and potential impact of heavy rains.