December 2023 was an overall good month for Indian Auto Retail, as total retails during the period saw a growth of 21% YoY, FADA President, Mr. Manish Raj Singhania said.
In December all categories reported significant growth with 2W, 3W, PV, Trac and CV growing on a YoY basis by 28%, 36%, 3%, 0.2% and 1.3% respectively. For CY2023, the year ended with double-digit growth as total retails increased by 11% YoY. All categories closed in green, with 2W, 3W, PV, Trac and CV growing on a YoY basis by 9.5%, 58.5%, 11%, 7% and 8% respectively, according to FADA which has released Vehicle Retail Data for December 2023 and calendar year 2023.
In the 2W category, key drivers included an abundance of marriage dates and the distribution of harvest payments to farmers, which enhanced purchasing power. Additionally, the availability of a wide range of models and variants, coupled with favourable weather conditions and a generally positive market sentiment, contributed to this robust growth. Enhanced product acceptance, particularly among the youth, and lucrative financial options, coupled with the anticipation of price increases in January 2024, spurred purchases.
The CV category experienced positive growth as increased industrial activity and infrastructure development continued to fuel demand for M&HCVs. The bus segment also saw a rise, particularly in tourism and transportation, aided by orders from various state transport departments. Additionally, robust liquidity in rural areas and the financial boost from crop sales supported customer purchases, although retail cases remained somewhat subdued despite some pre-buying in bulk.
In the PV category, SUVs in particular saw strong demand, with extended waiting periods for key models. This surge was fuelled by aggressive year-end promotions and the introduction of new models. However, a significant concern was the high inventory levels, reflecting over-supply. This ongoing issue of high PV inventory, despite a slight decrease by the year’s end, remains a critical area for OEMs to address, emphasizing the need for further moderation in inventory management.
Short Term Outlook
According to FADA, for January 2024, the auto retail sector displays a cautiously optimistic outlook across 2W, CV and PV categories:
Two-Wheelers: The sector anticipates a positive trend post mid-January, with all models available and increased marketing efforts. The upcoming election is expected to stimulate spending in this category. Improved customer sentiment, buoyed by factors like good crop prices and potential fuel price reductions, should enhance demand. Festivals and a robust marriage season are also likely to contribute to increased sales.
Commercial Vehicles: January is poised for growth with strong demand continuing, especially after mid-January. Good advance bookings and positive market sentiments, coupled with government policies and infrastructural projects, are expected to bolster sales. The passenger carrier segment, in particular, shows promise with increased rural mobility with good highways now in place.
Passenger Vehicles: The focus will be on clearing pending bookings and launching new 2024 models. Despite concerns over high inventory levels and the impact of year-end discounts, positive market sentiments and the introduction of new models are likely to drive growth. However, challenges remain in terms of supply constraints for higher variants and shifting consumer demands towards SUVs.
In summary, the impending Kharmas period, extending from 16th December’23 to 15th January’24, is forecasted to bring about a phase of reduced demand. Despite this anticipated slowdown, the industry maintains a stance of cautious optimism, buoyed by the launch of new models which are expected to sustain a high level of market enthusiasm. It is imperative to focus on the effective management of supply and inventory, particularly in the PV category. This strategic approach will be a critical factor in determining the industry’s success during this upcoming period. Furthermore, an increase in the interest rates for auto retail finance could potentially act as a moderating factor in market dynamics.
 by 0.2% and Commercial Vehicles (CV) by 1.3%.){kind=link}