Retail sales of automobiles in the domestic market declined 7.73 per cent in October this year, owing to a fall in two-wheeler uptake which was affected by the Shraadh period falling in the month. The Federation of Automobile Dealers Associations (FADA) said on Monday that automobile retail sales in October 2023 stood at 21,17,596 units, as compared to 22,95,099 units recorded in the same period last year. Shraadh marks an inauspicious period in the Hindu calendar which forbids making any new purchases during it.
The association noted in it’s statement that the retail sales of two-wheelers stood at 15,07,756 units last month, against 17,25,043 units reported in the corresponding period last year, marking a decline of 12.60 per cent, reported PTI. Passenger vehicle retail sales also came in along similar lines and fell 1.35 per cent last month at 3,53,990 units, as compared to 3,58,884 units sold in October 2022.
Meanwhile, three-wheeler retail sales broke the trend and witnessed a gain of 45.63 per cent last month at 1,04,711 units, against 71,903 units sold in the same period a year earlier. Commercial vehicle retail sales increased 10.26 per cent to 88,699 units in October 2023, while the corresponding period last year recorded sales in the segment at 80,446 units.
Commenting on the data, FADA President, Manish Raj Singhania, said, “The month commenced under the shadow of the inauspicious Shraddh period, until October 14. Consequently, a YoY comparison may not accurately reflect the actual trajectory of growth in the Indian Auto Retail sector.”
The data revealed that the first half of October, which included the Shraadh period, witnessed a fall of 8 per cent on a year-on-year (YoY) basis, while sequentially, the data indicated a growth of 13 per cent, representing the strong market demand.
The association 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 per cent on a YoY basis, crossing the numbers achieved during Navratri 2017.
Singhania stated, “Except for tractors, which saw an 8 per cent decline, all categories exhibited commendable growth. Two-wheelers, three-wheelers, commercial vehicles, and passenger vehicles experienced increases of 22 per cent, 43 per cent, 9 per cent, and 7 per cent, respectively during Navratri.”
Elaborating on the categories, the association head said, “The two-wheeler category during the Navratri period and throughout October saw several positive trends, buoyed by festive cheer and stronger rural demand. The passenger vehicles 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 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,” he added.
Singhania noted that the three-wheeler segment in the industry witnessed an upward trend in demand during Navratri, mainly due to the availability of competitive finance options and a major increase in demand for e-Rickshaw. Further, the expectation of Diwali in November and the entry of new models in the market led to a steady demand in October. “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,” he said.
Industry Outlook
The association gave mixed guidance for the auto sector. “ The near-term outlook for the auto sector is a blend of highs and lows as we approach year-end. 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,” FADA said.
Regarding the commercial vehicle segment, the association said the industry expects a robust November with festivities and construction activities adding a boost to the 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,” FADA noted.
Talking about the surged inventory levels in the passenger vehicle segment, the association noted, “High inventory levels in PVs, at a critical 63-66 days range, demand 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.
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