In a testament to the sustained demand in the Indian automotive sector, more than 2 million new vehicles were registered in February, marking a significant 13% increase compared to the same period last year. Data compiled by the Federation of Automobile Dealers Association (FADA) revealed that retail sales reached 2,029,541 vehicles in the past month, compared with 1,794,866 vehicles in February 2022.
Across-the-Board Growth: Two-Wheelers, Three-Wheelers, and Passenger Vehicles
FADA President Manish Raj Singhania highlighted the widespread growth in vehicle retail across various categories. Two-wheeler sales saw a notable 13% rise, reaching 1.4 million units, while three-wheelers experienced a substantial 24% increase, totaling 94,918 units. Singhania attributed the two-wheeler market’s growth to factors such as increased rural demand, premium model preferences, and strong performance in the entry-level segment.
Passenger Vehicle Segment Achieves Record 12% Growth in Indian automotive sector
The passenger vehicle (PV) segment witnessed a record-breaking growth of approximately 12%, with sales reaching 330,107 units in February. Singhania acknowledged the positive impact of strategic product launches and improved vehicle availability on the segment’s performance. However, he expressed concern over persistently high inventory levels, currently standing at 50-55 days.
Call for Action: Addressing Inventory Concerns and Production Adjustments
Singhania urged automakers to align production levels with market demand to alleviate the burden of elevated inventory at dealerships. While acknowledging favorable customer sentiment and successful model introductions. Singhania, stressed the importance of tackling high inventory levels to ensure sustained growth in the passenger vehicle segment.
Commercial Vehicles Showcase Resilience with 4.78% Growth
Commercial vehicles experienced a commendable 4.78% growth, reaching 88,367 units in February. Fleet purchases, heightened demand for school buses, and improved financing contributed to this growth, overcoming challenges such as cash flow shortages and deferrals related to election purchases.
Outlook and Challenges for the Near Term
Looking ahead, a revival in rural consumption will boost two-wheeler sales. Increased demand in premium and entry-level segments will also contribute to this growth. Anticipated through year-end purchases, fleet operators seeking depreciation benefits will maintain strong demand for three-wheelers and commercial vehicles.
Promotional offers, enhanced vehicle availability, and seasonal factors like marriages are expected to fuel demand in the passenger vehicle segment. However, Singhania cautioned that the looming anticipation of elections might lead to deferred purchases across segments. The commercial vehicles sector, in particular, could experience a cautious approach from customers awaiting the outcome of general elections.
