May auto retails impacted by heatwave and elections, dip 5.3% MoM: FADA

Auto retails in the month of May dropped 5.28 per cent on a monthly basis as showrooms saw lower footfall due to prevailing heatwave, lack of new models and the now-concluded Lok Sabha elections, auto body FADA said on Monday. However, they saw a rise of 2.6 per cent on an annual basis.Sales of two-wheelers increased 2.5 per cent year-on-year while three-wheelers rose 20 per cent. Passenger vehicles and tractor segment both saw a contraction of 1 per cent each while commercial vehicles grew 4 per cent, FADA said in a press release.

On a monthly basis, 2Ws, PVs, CVs’ retails saw a contraction of 6.6 per cent, 9.5 per cent and 8 per cent respectively. Despite the poor performance by other categories, 3Ws and tractors managed to grow 22.7 per cent and 23.7 per cent each on a monthly basis.

However, 2Ws’ retails declined 6.6 per cent on a monthly basis, owing to supply constraints, lack of OEM marketing activities and impacts from extremely hot weather and elections.

“Positive rural demand due to expected good monsoon and improved finance availability were also noted which kept the counters ticking,” said Manish Raj Singhania, President, FADA.

PV sales were impacted by market liquidity issues as lack of models, intense competition and poor marketing efforts by OEMs added to troubles. “Additionally, increased customer postponements and low enquiries further contributed tothe challenging market conditions. Due to the extreme heat, the number of walk-ins to showrooms dropped by around 18 per cent,” Singhania said.Extreme heatwave conditions didn’t spare the CV segment either. “Despite growth due to a low base from last year and increased bus orders, the industry faced challenges from wholesale pressures, government policy effects, and negative market sentiment,” the FADA official added.FADA in the near-term expects to see some stability with the elections now over even as it remains wary of extreme weather conditions and reopening of schools in July affecting the purchasers’ decision-making.

“Despite these positive indicators, challenges persist, including intense competition, lack of new model
launches and poor marketing efforts by OEMs. Liquidity issues and high inventory levels continue to strain
profitability for Dealerships. Although discount schemes and good product availability are in place, low
customer enquiries and postponements due to seasonal factors remain concerns,” FADA said.

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