The Federation of Automobile Dealers Associations (FADA) has unveiled its February 2024 Vehicle Retail Data, showcasing a robust 13% year-on-year growth across all vehicle categories in the Indian auto retail sector. The report, a detailed analysis of the market's performance, indicates promising trends and potential challenges as the industry strides into the future.
In February 2024, the Indian auto retail sector witnessed a significant uptick, with two-wheelers (2W), three-wheelers (3W), passenger vehicles (PV), tractors, and commercial vehicles (CV) registering growth rates of 13%, 24%, 12%, 11%, and 5% respectively. FADA President, Mr. Manish Raj Singhania, highlighted the key drivers behind this impressive performance.
The 2W market's growth, standing at 13% YoY, was majorly fuelled by the rural sector's demand, an inclination towards premium models, and the strength of the entry-level segment. The marriage season and an upbeat economic environment further buoyed the sector, indicating a solid recovery and expanding market reach.
The 3W segment experienced a remarkable 24% YoY surge, with electric vehicles (EVs) accounting for over half of this growth. The popularity of Electric E-Rickshaws and an influx of first-time users demonstrate a significant shift towards cleaner, more sustainable urban mobility solutions.
PV sales hit a record high, marking the best February performance ever with a 12% YoY growth. New product launches and improved vehicle availability played crucial roles in this achievement. However, elevated inventory levels in the PV segment, lingering around 50-55 days, remain a concern, urging OEMs to recalibrate production strategies to alleviate dealer burdens and sustain market health.
The CV sector, despite facing hurdles like cash flow issues and election-related uncertainties, posted a 5% YoY growth, indicating a resilient and recovering industry ready to meet the increasing demands of the economy.
Looking ahead, FADA adopts a cautiously optimistic stance for March 2024. The end of the financial year typically brings a surge in buying activities across segments, fuelled by robust signals from the rural market and enticing financial year-end incentives. Yet, the looming elections pose a potential deterrent to this momentum, with anticipated purchase deferrals and supply constraints, particularly in the PV sector, which could affect the overall market sentiment.
Key findings:
- PV inventory levels are high, ranging from 50-55 days, whereas 2W inventories are more moderate, spanning 10-15 days.
- The liquidity status is mixed, with 49.8% of respondents indicating neutrality, 32.81% expressing positivity, and 17.39% facing challenges.
- Sentiments mirror this mixed outlook, with 43.48% neutral, 36.36% positive, and 20.16% negative.
As March 2024 unfolds, expectations are tilted towards growth, with 56.13% of FADA's members anticipating an upward trajectory, 35.97% expecting stability, and a mere 7.91% bracing for a downturn.
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