The first month of 2024 has started on a promising note for India Auto Inc, with a total of 21,27,653 vehicles registered across categories, marking a 15 percent growth YoY and 6.87 percent over December 2023 reveals data shared by the Federation of Automobile Dealers Association (FADA).
In fact, even the two-wheeler segment which was reeling under pressure has seen a smart uptick of almost 15 percent; three-wheelers 37 percent; passenger vehicles 13 percent; tractors 21 percent and commercial vehicles 0.11 percent (albeit a high base).
Manish Raj Singhania, President, FADA said, “Several positive trends in the two-wheeler market signalled a robust start to the year. Improved vehicle availability, due to adjustments post-OBD 2 norm implementation, the introduction of new models and a shift towards premium options all contributed to increased demand. This, combined with a good harvest, a positive marriage season and effective follow-ups and offers, indicate a favourable trajectory for the two-wheeler sector. Furthermore, despite supply shortages, increased interest in electric vehicles highlights evolving consumer preferences within this segment.”
He further stated that in the three-wheeler segment, there was a mixed landscape. “While growth and optimism continue within the commercial three-wheeler market, intensified competition from electric models underscores a significant market shift – now 55% electrified.”
In the commercial vehicle segment, there was a complex scenario. On one hand, increased infrastructure development, port activity and positive crop yields fuelled certain market segments. However, this momentum was hindered by extreme weather, tightened liquidity, high vehicle costs and more restricted financing.
“A record-breaking month, the PV segment achieved all-time high retail sales of 3,93,250 units and impressive 13% YoY growth. SUV demand, along with the introduction of new models, greater availability, effective marketing, consumer schemes and the auspicious wedding season, underpinned this strong performance,” said Singhania.
| CATEGORY | Jan ’24 | Jan ’23 | YoY % | Dec ’23 | MoM % |
| Two-wheelers | 14,58,849 | 12,68,990 | 14.96% | 14,49,693 | 0.63% |
| Three-wheelers | 97,675 | 71,325 | 36.94% | 95,449 | 2.33% |
| E-RICKSHAW(P) | 40,526 | 29,955 | 35.29% | 45,108 | -10.16% |
| E-RICKSHAW WITH CART (G) | 3,739 | 1,990 | 87.89% | 3,688 | 1.38% |
| THREE WHEELER (GOODS) | 10,163 | 7,870 | 29.14% | 9,048 | 12.32% |
| THREE WHEELER (PASSENGER) | 43,188 | 31,455 | 37.30% | 37,522 | 15.10% |
| THREE WHEELER (PERSONAL) | 59 | 55 | 7.27% | 83 | -28.92% |
| Passenger vehicles | 3,93,250 | 3,47,086 | 13.30% | 2,93,005 | 34.21% |
| Tractors | 88,671 | 73,184 | 21.16% | 78,872 | 12.42% |
| Commercial vehicles | 89,208 | 89,106 | 0.11% | 73,896 | 20.72% |
| LCV | 49,835 | 52,892 | -5.78% | 41,804 | 19.21% |
| MCV | 5,454 | 4,874 | 11.90% | 4,808 | 13.44% |
| HCV | 29,179 | 28,479 | 2.46% | 23,050 | 26.59% |
| Others | 4,740 | 2,861 | 65.68% | 4,234 | 11.95% |
| Total | 21,27,653 | 18,49,691 | 15.03% | 19,90,915 | 6.87% |
But, he cautioned that despite this achievement, there were “serious concerns remain regarding PV inventory levels, now in the 50-55 day range.”
The FADA chief says that this calls for immediate recalibration of production from OEMs to better align with actual market demand and “avoid future oversupply issues.”
He stated that adaptability was crucial in this dynamic industry and OEMs must balance innovation with strategic production planning to ensure sustained success and overall market stability.
Outlook
The auto retail body feels that February 2024 presents a multi-faceted outlook for Indian Auto Retail. While dealers anticipate growth, it’s crucial to acknowledge the prevailing scenarios that require close observation:
Factors promoting growth:
- Demand drivers: The ongoing marriage season, anticipated income from agricultural sales provide a positive foundation for continued consumer spending, supporting growth in the two-wheeler segment.
- New launch momentum: Increased vehicle availability and successful new model introductions across all segments hold the potential to stimulate market demand.
- Policy impact: Favourable post-Union Budget policies are expected to drive growth in the CV sector, particularly within infrastructure-related industries.
- Potential for further growth: The government’s optimistic crop production estimates and continued support measures are expected to boost the rural economy, potentially leading to even higher tractor demand and increased sales of entry-level two-wheelers in rural areas.
Challenges and complexities:
- Market uncertainty: Anticipation of upcoming elections may introduce caution among consumers, affecting purchasing decisions across vehicle segments.
- Supply constraints: Persistent supply bottlenecks for specific high-demand models present a risk factor for consistent growth across two-wheeler, passenger vehicle and commercial vehicle segments, highlighting the need for OEM optimisation of production lines.
- Finance & liquidity: Fluctuating market liquidity and the potential for tighter financing in the CV sector require a focus on consumer financing solutions to support overall sales.
On an overall basis, the industry outlook leans towards cautious optimism but shows growth potential in near term concluded FADA.
