The Federation of Automobile Dealers Associations (FADA) has released the Vehicle Retail Data for September 2023.
Commenting on the vehicle retail data for September 2023, Mr Manish Raj Singhania, President of FADA, stated, “September’s Auto Retail celebrated a 20% year-on-year leap, maintaining the momentum from the previous month and marking a 3.5% month-on-month increase, seamlessly transitioning into the upcoming festive period set to unfold over the next 42 days.”
The year-on-year analysis reveals broad-based growth across segments, with 2-wheelers posting a 22% increase, 3-wheelers soaring at 49%, passenger vehicles (PV) growing by 19%, and commercial vehicles (CV) up by 5%. However, tractors experienced a decline of -10%. Compared to pre-COVID benchmarks, the sector enjoyed a robust 14% uplift, with the 2-wheeler category showing growth (2%) for the first time.
Remarkably, 3-wheeler sales reached an all-time high in September, recording 102,426 units. This represents a 49% year-on-year and 3% month-on-month growth, surpassing the previous record of 99,907 units set in August’23.
- Strong Year-on-Year Growth in September: The automotive retail in September showcased a robust double-digit year-on-year growth of 20%. Except for tractors, which witnessed a -10% decline, all other categories experienced growth, with 2-wheelers seeing a 22% increase, 3-wheelers at 49%, PV at 19%, and CV up by 5%.
- Positive Month-on-Month Dynamics: On a month-on-month basis, the industry enjoyed a 3.5% growth in total auto retail sales. However, the tractor segment continued to fall, with a substantial 26% contraction.
- Healthy Recovery Indicators: Compared to the pre-pandemic period, the overall retail landscape exhibited a massive 14% growth, signalling a healthy recovery. The 2-wheeler category, for the first time, showed a growth of 2%, potentially marking the beginning of a turnaround in rural markets.
- Record-Breaking 3-Wheeler Segment: The 3-wheeler segment maintained momentum, setting consecutive all-time high retail records. Sales for September peaked at 102,426 units, marking a staggering 49% year-on-year and 5% month-over-month growth and breaching the 1 Lakh mark.
- Unprecedented Inventory Levels: Inventory levels for PV have reached the 60-65 days threshold, establishing an all-time high as dealers anticipate a bumper 42-day festive period.
- Monsoon Patterns Favorable: September rainfall alleviated India’s drought fears, with the country receiving 94% of expected rains. The IMD forecasts a ‘normal’ north-east monsoon for the October to December period.
- Festive Season Outlook: October begins with the inauspicious Shraadh period until the 14th, post which the 9 days of Navratri will commence from October 15th. With the 42-day festive period (Navratri + Deepawali) approaching, FADA shifted its stance from Cautiously Optimistic to Optimistic, anticipating a vibrant festive season for Auto Retail in India with monsoon worries dispelled.
Near Term Outlook
As the festive season unfolds, a wave of anticipation and enthusiasm is expected to sweep across the automotive sector. In the 2-wheeler segment, although the initial half of the month might be quiet due to the Shraddh period, the aura of upcoming festivals like Durga Puja and Navratri is predicted to brighten the sales atmosphere, with enhanced customer sentiment and competitive pricing playing pivotal roles. The introduction of new models will further add to the optimism.
Similarly for CV, with the cessation of monsoons, a resurgence in infrastructure projects and essential goods transportation is anticipated in creating a robust demand. The market is likely to be buoyed by the availability of a broader range of vehicles and enticing finance options thus facilitating bulk purchases. In the PV segment, the market foresees a boost with the launch of new products, improved availability of popular models and continued success of recently unveiled vehicles.
With inventory for PV reaching an unprecedented 60-65 days threshold, it’s crucial for OEMs to proceed with caution, avoiding excessive inventory pushes, thereby ensuring a market that’s both vibrant and stable during the festive spree. The favorable monsoon patterns, with India, receiving 94% of expected rainfall, set a positive backdrop for the festive season. As we move past the Shraadh period on October 14th, the market is poised for the onset of Navratri, heralding a 42-day festive window. With these promising indicators, FADA adopts an Optimistic stance, anticipating a thriving festive season for the Indian Auto Retail sector.
Key Findings from the Online Members Survey:
- Inventory at the end of Sep’23: Average inventory for passenger vehicles ranges from 60-65 days and for 2-wheelers from 25-30 days. Tractors, however, are witnessing higher levels of inventory, with an average of 35-40 days.
- Footfalls at Dealerships: The overall footfalls at dealerships during September’23 were higher than those in September’22.
- 2-Wheeler Dealerships: The majority of 2-wheeler dealerships reported growth in retail sales. Over 50% of the 2-wheeler dealers surveyed witnessed an increase in retail sales.
- Passenger Vehicle Dealerships: For passenger vehicles, around 50% of the dealerships surveyed reported growth in retail sales.
- Commercial Vehicle Dealerships: Over 40% of commercial vehicle dealerships reported growth in retail sales.
- Tractor Dealerships: A significant number of tractor dealerships reported a decline in retail sales.
- Vehicle Financing: A majority of the dealerships reported that vehicle financing is readily available for their customers.