The Federation of Automobile Dealers Associations (FADA) believes that as the festive season unfolds, a wave of anticipation and enthusiasm is expected to sweep across the automotive sector.
There has been a jump of 20.36% YoY in auto retails to 1,882,071 units in September from 1,563,735 units sold in the same period last year. On a monthly basis, there was a 3.5% growth in auto retail sales.
The most significant jump was in the 3W segment which clocked an all-time high retail of 102,426 units, representing a 49% YoY and a 3% MoM growth. The segment saw retails of 99,907 units in August ’23.
Meanwhile, the 2W segment is also seeing positive shifts as the festive season approaches. The segment reported retails of 1,312,101 units with a 21.68% Yoy jump, while the average inventory for two-wheelers now ranges from 33-35 days.
Manish Raj Singhania, President, FADA said that with the introduction of new models and attractive promotional offers, demand has increased, especially in rural areas, fostering improved market sentiments.
He added that the uptick in demand is being accompanied by heightened customer walk-ins and an overall positive market response. Additionally, better stock availability compared to the previous year and a favourable reception to newly launched entry-level products have set an optimistic tone for the upcoming festive season.
Favourable Uptick
With retails of 80,804 units, representing a 4.87% YoY jump, September also showcased a resilient commercial vehicle segment, observing a noticeable demand in coal, cement and general market load sectors. The passenger carrier segment is also experiencing a favourable uptick.
The FADA president believes that the positive trend can be attributed to the adequate deployment of funds from the Centre towards infrastructure development, which fostered an environment for bulk deals, especially in tippers and government sectors.
Furthermore, there is a discernible improvement in market sentiment post-COVID, supporting a healthy traction in HCVs, buses and LCVs and signalling a revitalised tourism market.
The passenger vehicle category experienced a 'stimulating resurgence' to 332,248 units retailed representing a 19% YoY jump, as the market made the most of improved vehicle availability and an influx of new and refreshed models from various OEMs.
This uplift was supported by enhanced supplies and an increasing variety in the product portfolio, answering to a diversifying consumer demand. The market showed consistent demand for luxury cars and SUVs, signifying 'robust consumer appetite' for premium segments.
The segment also saw the benefit of pending bookings and the launch of promising products, laying the groundwork for potential growth in the upcoming festive season. The average inventory for passenger vehicles now ranges from 60-65 days.
| CATEGORY | SEP'23 | SEP'22 | YoY % | AUG'22 | MoM % |
| 2W | 13,12,101 | 10,78,286 | 21.68% | 12,54,444 | 4.60% |
| 3W | 1,02,426 | 68,937 | 48.58% | 99,907 | 2.52% |
| E-RICKSHAW(P) | 46,707 | 33,699 | 38.60% | 46,174 | 1.15% |
| E-RICKSHAW WITH CART (G) | 3,038 | 1,784 | 70.29% | 3,095 | -1.84% |
| THREE WHEELER (GOODS) | 9,014 | 6,510 | 38.46% | 9,060 | -0.51% |
| THREE WHEELER (PASSENGER) | 43,581 | 26,892 | 62.06% | 41,482 | 5.06% |
| THREE WHEELER (PERSONAL) | 86 | 52 | 65.38% | 96 | -10.42% |
| PV | 3,32,248 | 2,79,137 | 19.03% | 3,15,153 | 5.42% |
| TRAC | 54,492 | 60,321 | -9.66% | 73,849 | -26.21% |
| CV | 80,804 | 77,054 | 4.87% | 75,294 | 7.32% |
| LCV | 46,213 | 47,043 | -1.76% | 43,929 | 5.20% |
| MCV | 5,623 | 5,185 | 8.45% | 5,895 | -4.61% |
| HCV | 25,237 | 22,713 | 11.11% | 22,137 | 14.00% |
| Others | 3,731 | 2,113 | 76.57% | 3,333 | 11.94% |
| Total | 18,82,071 | 15,63,735 | 20.36% | 17,70,181 | 3.49% |
Tractors Down
While most segments saw a positive shift, tractors fell by 10% YoY to 54,492 units from 60,321 units in the same time last year.
The last two festive seasons have been quite painful for the industry due to the pandemic and subsequent roadblocks in the form of semiconductor crisis leading to low production. However Singhania seems confident this time around.
As he puts it, while September's auto retail saw a 20% YoY leap, continuing the momentum from the previous month, it is seamlessly transitioning into the festive period’s sweet spot set to unfold over the next 42 days.
In the 2W segment, although the initial half of the month might be quiet due to the Shraddh period, upcoming festivals like Durga Puja and Navratri could brighten the sales atmosphere, with enhanced customer sentiment and competitive pricing. The introduction of new models will further add to the buoyancy.
Similarly for CVs, with the cessation of monsoons, a resurgence in infrastructure projects and essential goods transportation is anticipated in creating a robust demand. The market is likely to be buoyed by the availability of a broader range of vehicles and enticing finance options thus facilitating bulk purchases.
In the PV segment, the market foresees a boost with the launch of new products, improved availability of popular models and continued success of recently unveiled vehicles.
However, with inventory for PVs reaching an unprecedented 60-65 days threshold, FADA says it's crucial for OEMs to proceed with caution, avoiding excessive inventory pushes, thereby ensuring a market that's both vibrant and stable during the festive spree.
Nonetheless, the favourable monsoon patterns, with India receiving 94% of expected rainfall, has set a positive backdrop for the festive season. 'As we move past the Shraadh period on October 14, the market is poised for the onset of Navratri, heralding a 42-day festive window,' adds FADA.
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