Vehicle registrations, a proxy for retail sales, rose by 9% in August to reach 1,818,647 units in India. This growth was driven by healthy customer demand ahead of the festive season, according to the Federation of Automobile Dealers Association (FADA). FADA expressed cautious optimism about the momentum continuing due to new vehicle launches and signs of revival in rural markets. However, it warned that insufficient monsoon rains could lead to inflation and impact consumer demand. Data compiled by FADA showed that passenger vehicle registrations increased by 6.53% to 315,153 units, while two-wheeler registrations rose by 6.29% to 1,254,444 units and commercial vehicle registrations increased by 3.23% to 75,294 units. FADA President Manish Raj Singhania highlighted that the auto retail sector showed a modest 0.8% improvement compared to pre-Covid benchmarks, with two-wheelers leading the recovery. Despite the growth in two-wheeler sales, consumer sentiments remained mixed, leading to lower conversion rates and intensified competition among key players. The inventory of two-wheelers currently stands at 23-25 days in the sales channel. In the passenger vehicle segment, sufficient supplies and promotional schemes by carmakers helped maintain a positive demand momentum. However, supply chain bottlenecks, particularly in timely deliveries, persist, while a limited product range in popular segments like mid-size SUVs hampers the overall potential, according to Singhania. The inventory of passenger vehicles now ranges from 58-63 days, which is a cause for concern as it has exceeded a 60-day supply for the first time even before the festive season. Singhania urged passenger vehicle original equipment manufacturers (OEMs) to closely monitor the situation. In the commercial vehicle segment, despite challenges such as sluggish cargo movement, verticals such as cement, iron ore, and coal showed robust demand.