The automotive retail sales in India saw a robust YoY performance across segments with a total of 20,29,541 vehicles sold in February 2024, up 13 percent YoY, as compared to 17,94,866 units sold for the same period last year.
Interestingly, barring Heavy Commercial Vehicles (HCVs) all product categories were in the green, with two-wheeler sales seeing an uptick of 13.25 percent; three-wheelers 23.85 percent; passenger vehicles 12.36 percent; tractors 11 percent; commercial vehicles 4.78 percent and others 47.34 percent respectively.
Manish Raj Singhania, President, Federation of Automobile Dealers Association (FADA) said, “The two-wheeler market’s 13% YoY growth was driven by the rural sector, premium model demand, and strong entry-level segment performance, with broader product availability and compelling offers enhancing product acceptance. Factors like favourable marriage dates and improved economic conditions also contributed to this positive growth.”
In the three-wheeler segment, electric vehicles made up for 53 percent of the growth, fuelled by first-time users and a shift towards electric e-rickshaws, alongside better market sentiment and consumer engagement.
Passenger vehicle inventory a concern
Singhania observed that the “PV segment achieved the highest sales figures ever recorded for the month of February. This upward trajectory was propelled by the strategic introduction of new products and enhanced vehicle availability. While the sector benefits from favourable customer sentiment and the successful introduction of models in high demand, the persistently elevated inventory levels, remaining at 50-55 days, present a significant concern.”
The FADA chief said that it was imperative for PV OEMs to undertake adjustments in production to mitigate these high inventory levels and thereby reduce the financial burden of carrying costs on dealers as it was vital for maintaining the financial health of dealers. Adopting this forward-looking stance is essential for ensuring the sustained growth and vitality of this segment.
The commercial vehicle segment overcame challenges through fleet purchases and school buses, strong sectoral demand and improved financing, despite obstacles like cash flow shortages and election-related purchase deferrals, highlighting the sector’s resilience and gradual recovery.
Short-term outlook
FADA states that looking at the short-term the auto retail sector is influenced by a blend of positive trends and challenges. The rural sector’s robust signals, along with an increased demand for premium and entry-level segments, are set to bolster the two-wheeler market. Similarly, both the three-wheeler and commercial vehicle sectors anticipate a boost in sales, driven by the financial year-end rush and an infusion of funds into the market, which is expected to stimulate purchases. In the passenger vehicle sector, the confluence of financial year-end buying incentives, improved availability of vehicles and seasonal factors such as marriages is likely to propel demand.
On the other hand, the anticipation of elections casts a shadow over this positive scenario, with potential deferred purchases across segments.
“The commercial vehicle sector, in particular, might face a cautious approach from customers waiting for the outcome of general elections. Supply constraints further complicate the landscape, especially in the passenger vehicle segment, where the availability of popular variants remain a concern. External factors like crop failures in rural areas could also dampen market sentiment and financial liquidity, posing additional hurdles to sustained growth,” added Singhania.
Overall, the near-term outlook for March 2024 in the auto retail sector is one of cautious optimism. Financial year-end activities traditionally spur purchasing across segments, yet the feedback from dealers highlights the nuanced challenges of inventory management, extremely aggressive target settings and evolving consumer preferences. “OEMs’ ability to address these challenges through strategic product introductions, supportive dealer policies and adaptive sales strategies will be paramount in maintaining the sector’s growth momentum and achieving success in in the near term,” he concluded.
| CATEGORY | FEB ’24 | FEB ’23 | YoY % | JAN ’24 | MoM% |
| Two-wheelers | 14,39,523 | 12,71,073 | 13.25% | 14,58,849 | -1.32% |
| Three-wheelers | 94,918 | 76,619 | 23.88% | 97,675 | -2.82% |
| E-RICKSHAW(P) | 36,579 | 30,736 | 19.01% | 40,526 | -9.74% |
| E-RICKSHAW WITH CART (G) | 4,435 | 2,446 | 81.32% | 3,739 | 18.61% |
| THREE WHEELER (GOODS) | 10,768 | 8,305 | 29.66% | 10,163 | 5.95% |
| THREE WHEELER (PASSENGER) | 43,065 | 35,076 | 22.78% | 43,188 | -0.28% |
| THREE WHEELER (PERSONAL) | 71 | 56 | 26.79% | 59 | 20.34% |
| Passenger vehicles | 3,30,107 | 2,93,803 | 12.36% | 3,93,250 | -16.06% |
| Tractors | 76,626 | 69,034 | 11.00% | 88,671 | -13.58% |
| Commercial vehicles | 88,367 | 84,337 | 4.78% | 89,208 | -0.94% |
| LCV | 48,594 | 47,551 | 2.19% | 49,835 | -2.49% |
| MCV | 6,454 | 5,001 | 29.05% | 5,454 | 18.34% |
| HCV | 28,271 | 28,359 | -0.31% | 29,179 | -3.11% |
| Others | 5,048 | 3,426 | 47.34% | 4,740 | 6.50% |
| Total | 20,29,541 | 17,94,866 | 13.07% | 21,27,653 | -4.61% |
