Passenger vehicle registrations dipped to 3,03,358 units last month, compared with 3,35,123 units in May 2023. File
| Photo Credit: V. V. Krishnan

Domestic passenger vehicle retail sales declined 1% year-on-year in May, as blistering summer heat and elections impacted demand, automobile dealers’ body FADA said on June 10.

Passenger vehicle registrations dipped to 3,03,358 units last month, as compared with 3,35,123 units in May 2023.

“Dealers cited the impact of elections, extreme heat and market liquidity issues as major factors for the dip in sales last month,” the Federation of Automobile Dealers Associations (FADA) President Manish Raj Singhania said.

Despite better supply, some pending bookings and discount schemes, the lack of new models, intense competition and poor marketing efforts by original equipment manufacturers (OEMs) also affected sales, he added.

Additionally, the month saw increased customer postponements and low enquiries, Mr. Singhania stated. Due to the extreme heat, the number of walk-ins to showrooms dropped by around 18%, he said.

Two-wheeler, three-wheeler sales rise

Two-wheeler sales rose 2% to 15,34,856 units in May, as against 14,97,778 units in the same month last year.

Mr. Singhania said positive rural demand on account of good rains in some regions and improved finance availability kept the counters ticking.

Three-wheeler retails rose 20% year-on-year to 98,265 units last month. Commercial vehicle sales increased by 4% at 83,059 units last month, as compared to 79,807 units in May 2023.

“Despite growth due to a low base from last year and increased bus orders, the industry faced challenges due to wholesale pressures, government policy effects, and negative market sentiment,” Mr. Singhania said.

‘Cautiously optimistic’ near-term outlook

He noted that the near-term outlook for automobile retail is ‘cautiously optimistic’, influenced by a mix of positive and challenging factors across various segments.

Government formation is expected to bring stability and improve market sentiment, he said. Dealers are hopeful about better supplies and positive movement in key sectors like cement, coal and iron ore, he added.

Above-normal rains during monsoon is expected to enhance rural demand and support economic activities, Mr. Singhania said, but warned that “extreme weather, such as heatwaves and heavy rains, along with the reopening of schools in July, might delay purchase decisions.”

Challenges persist, including intense competition, lack of new model launches and poor marketing efforts by OEMs, he said.

FADA, which represents over 15,000 automobile dealerships, collated sales data from 1,360 out of 1,503 RTOs across the country.