Auto retail sales for November saw a historic sale of 28.54 lakh vehicles, surpassing levels of March 2020, which sold 25.69 lakh vehicles during the Auto Industry’s transition from BS-4 to BS-6 emission norms.
Categories like two-wheelers and PV set new all-time highs, with two-wheelers selling 22.47 lakh vehicles, exceeding March 2020 20.7 lakh vehicles, while PV reached 3.6 lakh vehicles, surpassing October 22 sales of 3.57 lakh vehicles, noted the release issued by the Federation of Automobile Dealers Associations.
The two-wheeler category, which rose to glory during the festivities, grew by 49% on a month-on-month basis, aided by PV which grew by 2%, thus leading the entire industry to a growth of 35% month-on-month.
November 2023 witnessed a YoY growth of 18% and MoM growth of 35%. While 2W, 3W, and PV showed growth of 21%, 23%, and 17% respectively on a YoY basis, Trac and CV fell by 21% and 2% YoY.
The release cautioned that PV inventory levels were still high and continue to remain above 60 days, even though the inventory had reduced slightly. FADA urges PV OEMs to cut back on dispatches of slow-moving vehicles in the entry-level category and to announce extremely attractive schemes that will support year-end buying and help reduce inventory at dealerships, the release further noted.
Severe rains and hailstorms in west and south India are expected to dampen rabi cultivation, which is already experiencing slow sowing and low reservoir levels, potentially impacting the final crop output. This may also lead to increased inflation, making daily essentials more expensive and thus affecting vehicle sales in the near term.
Commenting on November 2023 Auto Retails, FADA President, Mr. Manish Raj Singhania said, “November 2023 has become a historic month for the Indian Auto Retail Industry as during the month, 28.54 lakh vehicles were sold, thus overtaking the previous highs of March 2020 when the industry sold 25.69 lakh vehicles during the BS-4 to BS-6 transition. Apart from this, 2W and PV also created new records”.
The 2W category sold 22.47 lakh vehicles, an increase of 1.77 lakh vehicles compared to the previous high of March 2020. The PV category also sold 3.6 lakh vehicles, around 4000 vehicles more when compared to previous highs of October 2022, he further added.
Near Term Outlook
In the near term, the 2W category is poised to benefit from a liquidity boost, particularly in agricultural regions and the ongoing marriage season, with around 38 lakh marriages expected to drive vehicle sales. However, challenges persist as severe weather conditions impacting rabi cultivation might affect rural incomes, potentially dampening sales. In contrast, the CV category is expected to see some recovery, driven by renewed business activities post-elections and positive movements in key sectors like cement and coal. Backlogs in orders might also contribute to a sales boost.
The PV sector shows potential for growth with year-end offers and discounts expected to stimulate sales, along with an improved vehicle supply and new product launches. However, the market faces hurdles in terms of a preference for 2024 manufactured vehicles and a notable slowdown in demand and bookings post festivities. The current PV inventory, still above 60 days, underscores the need for OEMs to strategically reduce dispatches of slow-moving vehicles, especially in the entry-level category. Historically, it is recognized that holding inventory beyond 30 days starts to erode dealer profitability as the financial burden is intensified by the high interest costs of inventory funding from financial institutions.
Overall, while opportunities exist in terms of new product launches and seasonal demands, the Indian Auto Retail must navigate through a complex landscape of consumer preferences, high inventory in the PV category and external economic factors, including potential inflation impacts on vehicle sales in the near term.
