The month gone by thanks to a robust festive demand has augured well for the Indian automotive retail sales. In fact, as per the data released by the Federation of Automobile Dealers Associations (FADA) the overall monthly sales came at 28.54 lakh units, which was 18.46 percent higher YoY and surpassing March 2020 record sales (transition from BS4 to BS6) of 25.69 lakh units by 11 percent.
Manish Raj Singhania, President, FADA said, “November’23 has become a historic month for the Indian auto retail industry as during the month. Apart from this, two-wheeler and passenger vehicles also created new records.”
He was referring to the sales of 22.47 lakh two-wheelers, which was an increase of 1.77 lakh vehicles compared to the previous high of March 2020. The passenger vehicle sales came at 3.6 lakh units, around 4,000 units higher than the previous record set in October 2022.
But on the other hand, the sales of tractors and commercial vehicles were in the red by 21.28 percent and 1.82 percent respectively.
“For the 2W category, the month witnessed a significant boost in auto retail, thus making it clock all-time high retails, buoyed by the festive excitement of Diwali and enhanced by strong rural sentiments, thanks to thriving agricultural income. New product launches and better model supply further fuelled the market’s growth, while electric vehicle sales demonstrated an encouraging upward trajectory. The CV category saw a challenging Nov’23, driven by poor market sentiment. Seasonal slumps, exacerbated by unseasonal rains damaging crops and impacting transport demand, coupled with liquidity issues and delayed deliveries, further strained the industry. States going into elections also added to the woes, overshadowing the brief uplift from festive sales and the slight increase in tourism that helped in sales of buses,” added Singhania.
The passenger vehicle sales benefitted from improvements in the supply chain, festival demand as well and new product launches.
“However, the period following the festivities saw a noticeable slowdown, coupled with a critical challenge of slow-moving inventory due to a mismatch in demand and supply which is still not resolved. This issue casts a shadow over the otherwise positive trends, highlighting the need for strategic adjustments in inventory management,” he added.
Marriage season and improved liquidity boost to drive two-wheeler sales
The auto dealer body states that in the near term, the two-wheeler category is poised to benefit from a liquidity boost, particularly in agricultural regions and the ongoing marriage season, with around 38 lakh marriages expected to drive vehicle sales.
However, FADA says challenges persist as severe weather conditions impacting rabi cultivation might affect rural incomes, potentially dampening sales. In contrast, the CV category is expected to see some recovery, driven by renewed business activities post-elections and positive movements in key sectors like cement and coal.
| CATEGORY | Nov ’23 | Nov ’22 | YoY % | SEP’23 | MoM % |
| Two-wheelers | 22,47,366 | 18,56,108 | 21.08% | 15,07,756 | 49.05% |
| Three-wheelers | 99,890 | 81,007 | 23.31% | 1,04,711 | -4.60% |
| E-RICKSHAW(P) | 41,708 | 35,664 | 16.95% | 45,734 | -8.80% |
| E-RICKSHAW WITH CART (G) | 3,201 | 1,952 | 63.99% | 3,023 | 5.89% |
| THREE WHEELER (GOODS) | 9,862 | 8,859 | 11.32% | 10,067 | -2.04% |
| THREE WHEELER (PASSENGER) | 45,024 | 34,487 | 30.55% | 45,814 | -1.72% |
| THREE WHEELER (PERSONAL) | 95 | 45 | 111.11% | 73 | 30.14% |
| Passenger vehicles | 3,60,431 | 3,07,550 | 17.19% | 3,53,990 | 1.82% |
| Tractors | 61,969 | 78,720 | -21.28% | 62,440 | -0.75% |
| Commercial vehicles | 84,586 | 86,150 | -1.82% | 88,699 | -4.64% |
| LCV | 48,322 | 51,560 | -6.28% | 49,666 | -2.71% |
| MCV | 5,276 | 5,082 | 3.82% | 5,980 | -11.77% |
| HCV | 26,690 | 26,585 | 0.39% | 28,940 | -7.77% |
| Others | 4,298 | 2,923 | 47.04% | 4,113 | 4.50% |
| Total | 28,54,242 | 24,09,535 | 18.46% | 21,17,596 | 34.79% |
Backlogs in orders might also contribute to a sales boost. The passenger vehicle sector shows potential for growth with year-end offers and discounts expected to stimulate sales, along with an improved vehicle supply and new product launches.
“However, the market faces hurdles in terms of a preference for 2024 manufactured vehicles and a notable slowdown in demand and bookings post festivities. The current PV inventory, still above 60 days, underscores the need for OEMs to strategically reduce dispatches of slow-moving vehicles, especially in the entry-level category. Historically, it is recognised that holding inventory beyond 30 days starts to erode dealer profitability as the financial burden is intensified by the high interest costs of inventory funding from financial institutions. Overall, while opportunities exist in terms of new product launches and seasonal demands, the Indian auto retail must navigate through a complex landscape of consumer preferences, high inventory in the PV category and external economic factors, including potential inflation impacts on vehicle sales in the near term,” concludes Singhania.
