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Auto retail records 11% overall growth in September on festive spirit

Even as the Auto Retail segment grew by 11%, the lack of sufficient growth in the two wheeler segment continues to drag down overall numbers. However FADA is optimistic about October's festive season 'driving' demand.

October 04, 2022 / 01:31 PM IST
Representative Image

Representative Image

Retail sales in automobile sector zoomed 11 percent in September, according to Federation of Automobile Dealers Associations (FADA).

“Auto Retail for the month of September saw an overall growth of 11 percent. September witnessed both, the inauspicious period of Shradh from September 10-25 and festive period which began with Navratri on September 26. Due to this, the full potential for the month was not realised as it should have been," FADA President Manish Raj Singhania said.

While there may be an overall 11 percent growth, FADA said that when compared to  September 2019, total vehicle retails stayed down 4 percent.

The personal vehicle retail segment showed 44 percent growth even as the the two-wheeler segment is yet to show signs of any revival as it fell by 14 percent over the pre-Covid figures of September 2019. The commercial vehicle segment also showed  an increase of 6 percent, 37 percent and 17 percent, respectively, a FADA statement said.

It mentioned various reasons for the lacklustre performance of the two-wheeler segment. Battling increased input costs and the RBI's rate hikes which continued to make vehicle loans expensive, the two-wheeler segment is finding extremely less buyers.

"Two wheelers contribute around 70% of the total auto retail numbers and the two wheeler segment has yet to come up to pre-covid levels. We see a degrowth of almost 14% in pre covered levels in two wheelers. The entry level segment has not been able to perform not only in two wheelers as it is also not performing in passenger cars." FADA's President told CNBC in an interview.

A structural shift has been witnessed in the three-wheeler segment from from ICE technology to EV. The demand for EVs is fuelled by a mindset change in customers who have started using public transport and rickshaw services. This demand is supplemented by the availability of vehicles with full range products including alternate fuels, the release said.

The commercial vehicle sector's 19 percent growth was driven by the HCV segment which showed a growth of 40 percent YoY. Better availability of vehicles, festivities, bulk fleet purchase and the government’s continued push for infrastructure development made the HCV segment shine.

Easing of the semi-conductor supply, new launches and feature rich products drove the  10 percent YoY growth and 44 percent growth from September 2019 in the personal vehicle segment, the release said.

FADA is bullish on the growth of the auto retail sector in the festive season. FADA predicts auto retail  will see high demand within the 24 days of festive season out of the total 31 days of October.

"Every segment is responding well, details are coming up nice and overall we'll see a positive trend happening, positive retails happening in overall festive period, 42 day festive period. In fact passenger vehicle will create a new record in terms of sales in this 42 days period and I think it will be the decade's highest sale.", FADA's President said.

As far as the laggard growth in the two wheeler sector is concerned, FADA feels that the enquiry level in the two wheeler segment is showing positive movement.

Highlighting the need for the entry-level two-wheeler segment to grow to low double digits, FADA noted that auto retail will see higher growth compared to last two festivals but may still lag pre-Covid numbers of October 2019.

Ayush Khar
first published: Oct 4, 2022 11:00 am