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FADA President, Mr. Manish Raj Singhania said, “November 2022 has clocked the highest retails in the history of the Indian Automobile Industry with March’20 as an exception when retails were higher due to BS-4 to BS-6 transition. Auto Retail in November’22 saw an overall growth of 26%. The baton was passed by the positive run of festive sales to the Great Indian Wedding Season (from 14th November to 14th December) where around 32 lakh weddings will be solemnized across the country. All categories were in the green with 2W, 3W, PV, Tractor, and CV growing by 24%, 80%, 21%, 57%, and 33% respectively.
Even when compared to the pre-covid month of 2019, overall retails for the second consecutive month closed in green by growing 1.5%. Except for 2W, which saw a marginal dip of -0.9%, all the other categories like 3W, PV, Trac, and CV grew by 4%, 5%, 61%, and 6% respectively.
The 2W segment showed a huge growth of 24% YoY but fell marginally by 0.9%, when compared to Nov’19, a pre-covid year. This segment is slowly turning the tides from negative to positive as the same can be witnessed from retail sales due to the ongoing wedding season. The 3W segment showed a massive growth of 80% YoY and 4% when compared to 2019, a pre-covid year. The category which was witnessing low demand during covid has now emerged as the highest growing category due to positive sentiments and fear of lockdowns out of mind. Also, electrification in the category continues at its highest pace.
The PV segment showed a growth of 21% YoY and 5% when compared to 2019. Better availability of model mixes from past months, new launches, and an increase in rural demand continues to keep the segment in healthy condition. The compact SUV and SUV category coupled with higher variant models continues to rule to roost.
The CV witnessed a growth of 33% YoY and 6% compared to 2019. With Government’s continued focus in the infrastructure space and new mining projects, replacement demand continued to pour in along with healthy inter-state passenger movement enabling bus sales.”
The RBI’s latest Consumer Confidence Data suggests that buoyancy among customers is on a recovery path on account of better perceptions of the general economic situation, employment, and household income. This along with the ongoing festive season has continued to help in bringing customers to the showrooms as of date.
For Bharat, normally after the harvest starts, farmers get money in hand and this starts the spending cycle. We expect spending for Auto Sales to go up once the harvest comes into the market and farmers start getting money in their hands. Most of the OEMs are announcing price hikes going forward. To counter this and for the lower end of the pyramid, OEMs have started announcing discounts for slow-moving products, and lower variants, and clearing their year-end stocks. This may help year-end sales to remain healthy.
While the above actions are positive, RBI has yesterday increased the repo rate by 35 bps (225 bps increase since May 22) and continues to hint at more hikes in the future. This increase now brings the repo rate to 6.25%, the highest since Feb’19. This will further lead to a higher cost of borrowing apart from the price hikes done by OEMs and may dent consumer confidence, especially in 2W and entry-level PV segment.
Along with this, the China lockdown may play its part in slowing the supply of semiconductors. If this happens, it may act as a speed-breaker and add to the supply-demand mismatch which was improving in the last few months.