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Domestic Passenger Vehicle Sales Take a Slight 1% Hit in May Amid Heatwave and Election Buzz

Domestic passenger vehicle sales declined 1 per cent year-on-year as the impact of elections and heatwave took a toll on retail sales figures

Domestic passenger vehicle sales witnessed a 1 per cent year-on-year decrease, largely owing to factors like heatwave and the impact of elections. As per the Federation of Automobile Dealers Associations (FADA), registrations for passenger vehicles dropped to 303,358 units compared to 335,123 units in May 2023.

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"Dealers cited the impact of elections, extreme heat and market liquidity issues as major factors for the dip in sales last month," Manish Raj Singhania, President, FADA said.

Despite improvements in supply, there was no uptick in sales figures largely due to pending bookings and discount schemes, the absence of new vehicle models, stiff competition, and ineffective marketing strategies from OEMs (original equipment manufacturers), Singhania said. On top of it, there was a rise in customers delaying purchases and low inquiries during the month.

Singhania also said that showroom footfall declined by nearly 18 per cent due to the extreme heat. However, it was not all dull as two-wheeler sales saw a 2 per cent increase to 1,534,856 units in May compared to the corresponding period last year.

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

Meanwhile, three-wheeler retail sales rose 20 per cent year-on-year to 98,265 units last month, while commercial vehicle sales increased by 4 per cent to 83,059 units compared to May 2023.

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"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," Singhania added.

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.

"However, extreme weather, such as heatwaves and heavy rains, along with the reopening of schools in July, might delay purchase decisions," Singhania said.

(With inputs from PTI)

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