Record 3.93 lakh car sales,13.3% growth in PV sales in January: FADA

Robust auto sales boost ecomy: After subdued domestic automobile sales in December, post robust festive car purchases seen during Diwali last year, India’s automotive market has yet again regained its tag of world’s third-largest automobile market and logged healthy sales numbers for January 2024. 

Federation of Automobile Dealers Associations (FA) which released its January sales numbers for January said auto retail market in January 2024 witnessed significant growth across all vehicle categories, marking a positive start to year with an overall expansion of 15 per cent. Will FA’s January auto sales, released a day after country recorded a fall in heline inflation and healthy employment data be a shot in arm for auto sector in 2024? Republic Business takes a deep dive. 

Growth drivers 

Balancing growth signals and navigating challenges ahe of February 2024, presents a multi-faceted outlook for Indian auto retail. While dealers anticipate growth, it is crucial to ackwledge prevailing challenges that require close navigation such as factors promoting growth and demand. 

Im credit: Unsplash 

ongoing marri season and anticipated income from agricultural sales provide a positive foundation for continued consumer spending, supporting growth in two-wheeler segment, and new launch momentum is leing to increased vehicle availability and successful new model introductions across all segments hold potential to stimulate market demand. 

favourable post-Union Budget policies are expected to drive growth in CV sector, particularly within infrastructure-related industries.  

SUV demand, along with introduction of new models, greater availability, effective marketing, consumer schemes, and auspicious wedding season, underpinned this strong performance. However, despite this achievement, 

n-urban centers at forefront 

Leing auto sales surge were two-wheelers with a table 15 per cent growth, followed closely by three-wheelers at 37 per cent, passenger vehicles (PV) at 13 per cent, tractors at 21 per cent, and commercial vehicles (CV) showing a modest 0.1 per cent increase, revealed FA data. 

“ demand for two-wheelers remained resilient, driven primarily by ongoing strength in rural market. This segment is poised to benefit from government's positive crop production forecasts and continued support for rural ecomic growth,” said report, ding that demand for two-wheelers remains stey, fuelled by continued strength in rural market. 

Tractor sales rebounded positively following a period of slowdown in previous months. This resurgence can be attributed to expectations of a favorable Rabi crop output and conducive wear conditions for wheat cultivation, it said. 

“This segment is likely to benefit from government's good crop production estimates and continued support for rural ecomy. passenger vehicle segment achieved a new all-time high in January, retailing 3,93,250 vehicles and surpassing previous record set in vember 2023,” said report. 

However, a persistent concern lies in high inventory levels, which still hover in 50-55-day range, posing a challenge for auto dealers. Tractor sales saw a positive uptick after a slowdown in previous months, likely driven by anticipation of a good Rabi crop output and favourable wear conditions for wheat cultivation, automotive industry lobby report furr said.  

Industry-wide growth

January marked a historic milestone for passenger vehicle segment, with retail sales reaching an unprecedented 3,93,250 vehicles, surpassing previous record set in vember 2023, revealed FA sales report.  

Despite this achievement, concerns persist regarding high inventory levels, which continue to hover between 50-55 days, posing challenges for auto dealers, according to FA report. month of January saw strong growth across all vehicle categories, with overall auto retail market expanding by 15 per cent. 

Commenting on auto retail sales, FA President Manish Raj Singhania said, “January 2024 began on a promising te for calendar year, demonstrating 15 percent overall retail growth compared to previous year. All vehicle categories – two-wheelers, three-wheelers, passenger vehicles, tractors, and CVs– achieved positive YoY growth of 15 per cent, 37 per cent, 13 per cent, 21 per cent, and 0.1 per cent respectively,” Singhania said. 

Several positive trends in two-wheeler market signalled a robust start to year on back of improved vehicle availability, due to justments post-OBD 2 rm implementation, introduction of new models, and a shift towards premium options all contributed to increased demand, said FA in its report. 

“OBD 2 rm implementation combined with a good harvest, a positive marri season, and effective follow-ups and offers, indicate a favourable trajectory for 2W sector. Furrmore, despite supply shorts, increased interest in electric vehicles highlights evolving consumer preferences within this segment,” said report. 

Cautious optimism for CVs

commercial vehicle segment might experience a slight demand taper in fourth quarter due to a high base effect and upcoming elections. However, long-term fundamentals remain positive, with expectations of a post-election rebound as underlying industries resume tender processes.

three-wheeler sector revealed a mixed landscape, report said. While growth and optimism continue within commercial three-wheeler market, intensified competition from electric models underscores a significant market shift – w 55 per cent electrified. 

“January 2024 presented a complex scenario for CV segment, demonstrating limited YoY growth. On one hand, increased infrastructure development, port activity, and positive crop yields fuelled certain market segments. However, this momentum was hindered by extreme wear, tightened liquidity, high vehicle costs, and more restricted financing,” report stated. 

A record-breaking month, PV segment achieved all-time high retail sales of 3,93,250 units and impressive 13 per cent per cent YoY growth. Serious concerns remain regarding PV inventory levels, w in 50- 55 day range. This calls for an immediate recalibration of production from OEMs to better align with actual market demand and avoid future oversupply issues. As aptability is crucial in this dynamic industry, OEMs must balance invation with strategic production planning to ensure sustained success and overall market stability," FA sales report ded.