FADA: Auto retails jump 21% in December; CY23 growth in double digits: FADA

All sectors experienced favourable expansion, showcasing robust performance. Notably, two-wheeler (2W) sales surged by 28 per cent, three-wheeler (3W) sales demonstrated a growth of 36 per cent, and passenger vehicle (PV) sales exhibited a steady increase of 3 per cent. Moreover, tractor sales and Commercial Vehicle (CV) sales increased by 0.2 per cent and 1.3 per cent respectively.

For CY 23, the year ended with double-digit growth as total retails increased by 11 per cent YoY. All categories closed in green, with 2W, 3W, PV, Tractor and CV growing on a YoY basis by 9.5 per cent, 58.5 per cent, 11 per cent, 7 per cent and 8 per cent respectively, according to FADA.

“In the 2W category, key drivers included an abundance of marriage dates and the distribution of harvest payments to farmers, which enhanced purchasing power. Additionally, the availability of a wide range of models and variants, coupled with favourable weather conditions and a generally positive market sentiment, contributed to this robust growth. Enhanced product acceptance, particularly among the youth, and lucrative financial options, coupled with the anticipation of price increases in January 2024, spurred purchases,” said Manish Raj Singhania, FADA President.

The CV category experienced positive growth as increased industrial activity and infrastructure development continued to fuel demand for M&HCVs, he added. “The bus segment also saw a rise, particularly in tourism and transportation, aided by orders from various state transport departments. Additionally, robust liquidity in rural areas and the financial boost from crop sales supported customer purchases, although retail cases remained somewhat subdued despite some pre-buying in bulk.”

In the PV category, SUVs in particular saw strong demand, with extended waiting periods for key models, said Singhania. “This surge was fuelled by aggressive year-end promotions and the introduction of new models,” he added.”However, a significant concern was the high inventory levels, reflecting over-supply. This ongoing issue of high PV
inventory, despite a slight decrease by the year’s end, remains a critical area for OEMs to address, emphasizing the need for further moderation in inventory management,” according to FADA.

The inauspicious Kharmas period, starting from 16th December 2023 to 15th January 2024, is anticipated to lead to a period of slower demand, said FADA.

Despite this anticipated slowdown, the industry maintains a stance of cautious optimism, buoyed by the launch of new models which are expected to sustain a high level of market enthusiasm. It is imperative to focus on the effective management of supply and inventory, particularly in the PV category. This strategic approach will be a critical factor in determining the industry’s success during this upcoming period. Furthermore, an increase in the interest rates for auto retail finance could potentially act as a moderating factor in market dynamics.