The Indian passenger vehicle (PV) segment saw a 1.36 percent drop in retail sales in October 2023 on a year-on-year basis, according to the Federation of Automobile Dealers Associations (FADA). Auto dealers sold 3,53,990 units of PVs last month, as against 3,58,884 units in October 2022.
FADA claimed that October commenced under the shadow of the “inauspicious" Shraddh period, persisting until the 14th. Consequently, a YoY comparison "may not accurately reflect" the actual trajectory of growth in the Indian auto retail sector, it said.
Shraddh marks an inauspicious period in the Hindu calendar, during which people avoid making any new purchases.
FADA president Manish Raj Singhania said, “The PV segment navigated a complex landscape, marked by both enthusiasm and caution. During Navratri, despite regional variability, the industry witnessed a surge in bookings, buoyed by the introduction of compelling new models, particularly SUVs and the availability of attractive consumer offers. However, the impact of local elections and market saturation meant that the festive spirit didn't translate uniformly into sales across all regions."
However, wholesale numbers were up as industry carmakers dispatched around 3,91,472 units last month, the highest ever monthly sales in the history of the domestic PV market. On a year-on-year (YoY) basis, auto dispatches were up 16.3 percent from 3,36,679 units sold in October 2022, as per industry analysts.
“Throughout the month, the anticipation for Diwali in November and the launch of new models generated a steady demand. The period overall saw a resilient PV market, supported by a stronger product line-up unlike last year, when stock availability was a major issue," added Singhania.
Two-wheeler sales
The retail sales of two-wheelers stood at 15,07,756 units last month, vis-à-vis 17,25,043 units reported in the corresponding period last year, a decline of 12.60 percent. The auto retail body claimed that the two-wheeler category during the Navratri period and throughout October saw several positive trends, buoyed by “festive cheer” and “stronger rural demand”.
Overall automobile retail sales in the domestic market declined by 7.73 percent in October this year at 21,17,596 units, as compared to 22,95,099 units recorded in the same period last year.
Three-wheeler retail sales, however, bucked the trend by witnessing a 45.63 percent surge last month at 1,04,711 units, as against 71,903 units sold in the same period a year earlier. Commercial vehicle retail sales also saw an uptick as the numbers increased 10.26 percent to 88,699 units in October 2023 as compared to 80,446 units in the same month last year.
FADA noted that categories across the automotive industry are maintaining a strong pace amid the ongoing festive season. Notably, Navratri 2023 reported a milestone with retail sales climbing 18 percent on a YoY basis, crossing the numbers achieved during Navratri 2017.
Singhania said, “Except for tractors, which saw an 8 percent decline, all categories exhibited commendable growth. Two-wheelers, three-wheelers, commercial vehicles, and passenger vehicles experienced increases of 22 percent, 43 percent, 9 percent, and 7 percent, respectively, during Navratri.”
He noted that the three-wheeler segment in the industry witnessed an upward trend in demand during Navratri, largely driven by the availability of competitive finance options and a significant increase in demand for e-rickshaws, signalling a healthy move towards electrification.
“October continued this positive trend with robust market sentiments and festive celebrations contributing to increased customer bookings,” he said.
Near term outlook
Meanwhile, FADA gave mixed guidance for the auto sector.
“Festivities along with harvest season, especially paddy, are expected to boost two-wheeler sales, with optimism fuelled by new schemes and a push towards electrification, despite supply concerns,” the FADA statement said.
Regarding the CV segment, the association said that the industry expects a robust November with festivities and construction activities giving a further fillip to demand. However, the PV segment is navigating through a tricky phase.
“Festive days might spike bookings, yet the shadow of year-end discounts looms over immediate sales,” as per FADA.
On inventory levels in the PV segment, the association said that high inventory levels of 63-66 days warranted urgent attention from OEMs.
“Without substantial interventions and if Diwali sales don't rise to the occasion, the weight of unsold stock could lead to significant dealer distress. It could lead to industry-wide repercussions. Therefore, the association called for the industry to take immediate and decisive action to manage the risk of a financial squeeze as the year comes to a close,” FADA said.
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