Automobile retail sales drop 7% in Feb amid slowing demand: FADA

New Delhi: Automobile retail sales across categories, including passenger vehicles and two-wheelers, witnessed a drop of 7 per cent in February amid declining demand, dealers' body FADA said on Thursday.

Overall retail sales in the domestic market stood at 18,99,196 units last month, registering a dip of 7 per cent compared to 20,46,328 units in the year-ago period.

"February witnessed a broad-based downturn across all categories," Federation of Automobile Dealers Associations (FADA) President C S Vigneshwar said in a statement.

During the month, dealers began expressing concerns about inventory being pushed to them without their consent, he added.

"While such initiatives may serve broader business objectives, it is critical to align wholesale allocations with genuine demand to protect dealer viability and ensure healthy inventory management," Vigneshwar stated.

Passenger vehicle retail sales declined 10 per cent year-on-year to 3,03,398 units in February.

"Dealers noted weak market sentiment which specially continues in the entry level category, delayed conversions, challenging targets and stressed that OEMs should avoid overburdening dealers with excessive inventory -- a practice that risks unmanageable stock levels given the cyclical nature of the industry," Vigneshwar said.

Inventory levels in this segment remained in the range of 50-52 days, he noted.

Two-wheeler sales witnessed a drop of 6 per cent year-on-year in February at 13,53,280 units as compared to 14,44,674 units sold in February last year.

Dealers attributed this to inventory imbalances, aggressive pricing adjustments, weak consumer sentiment, lower enquiry volumes and limited finance availability, Vigneshwar noted.

Concerns over slow-moving models and external economic pressures, such as liquidity constraints and inflation, further intensified these challenges, he added.

Urban areas experienced a sharper decline as compared to drop in rural markets, Vigneshwar stated.

Commercial vehicle retail sales dropped 9 per cent year-on-year to 82,763 units in February.

Dealers pointed to a challenging commercial environment, with weak sales in transportation sector, tightening finance norms and pricing pressures delaying customer decisions, particularly in bulk orders and institutional contracts, Vigneshwar stated.

Tractor sales declined 14.5 per cent year-on-year to 65,574 units in February.

On near term sales outlook, FADA stated that dealers remain cautiously optimistic for March.

However, challenges remain, as five consecutive months of declining stock markets have dampened consumer confidence, with investors closing more SIPs rather than opening new ones and reduced discretionary spending driven by dented profitability, it stated.

Despite this, the convergence of multiple festivals -- ranging from Holi and Gudi Padwa to the onset of Navratri -- and year-end depreciation benefits are expected to provide a much-needed boost to vehicle purchases, it added.