Rural demand and EV surge drive strong auto sales in February: FADA

Monthly auto sales: FADA The Federation of Automobile Dealers Associations (FADA) has released the Vehicle Retail Data for February 2024, showcasing a robust overall growth of 13 per cent year-on-year (YoY) in the Indian Auto Retail sector. Manish Raj Singhania, President of FADA, highlighted the growth across all vehicle categories, with 2W, 3W, PV, Tractors, and CV sectors registering growth rates of 13 per cent, 24 per cent, 12 per cent, 11 per cent, and 5 per cent respectively.

The 2W market's growth was notably driven by factors such as rural demand, premium model preferences, and strong performance in the entry-level segment, buoyed by broader product availability and attractive offers. Additionally, favourable economic conditions and strategic factors like auspicious marriage dates contributed to this positive trend.

In the 3W market, a significant surge of 24 per cent YoY was observed, with electric vehicles (EVs) accounting for 53 per cent of this growth. The rise in EV adoption, particularly in Electric E-Rickshaws, alongside improved market sentiment and consumer engagement, fueled this expansion.

The PV segment achieved impressive sales figures with a 12 per cent YoY growth, marking the highest February sales recorded. This growth was attributed to strategic product introductions and improved vehicle availability. However, concerns were raised regarding elevated inventory levels, necessitating adjustments in production to mitigate dealer carrying costs.

Despite challenges such as cash flow shortages and election-related purchase deferrals, the CV sector demonstrated resilience with a 5 per cent YoY growth, driven by fleet purchases, school buses, and improved financing.

Looking ahead, the near-term outlook for March 2024 in the auto retail sector is cautiously optimistic. Positive signals from the rural market and financial year-end buying activities are expected to boost sales across segments. However, challenges such as election-related uncertainties, supply constraints, and external factors like crop failures could impact market sentiment and growth prospects.

Overall, OEMs' strategic initiatives, supportive dealer policies, and adaptive sales strategies will be crucial in navigating the changing landscape and sustaining growth momentum in the near term.