The Federation of Automobile Dealers Associations (FADA) has released the Vehicle Retail Data for December’23 and CY’23, showcasing a positive trend in the Indian auto retail sector.
December’23 Highlights:
- Overall growth of 21% YoY in Auto Retail.
- Positive growth in all categories: 2W by 28%, 3W by 36%, PV by 3%, Tractors (Trac) by 0.2%, and Commercial Vehicles (CV) by 1.3%.
CY’23 Performance:
- Double-digit growth of 11% YoY in total retails.
- Growth was recorded across all segments: 2W by 9.5%, 3W by 58.5%, PV by 11%, Tractors by 7%, and CV by 8%.
Key Drivers:
- The abundance of marriage dates and distribution of harvest payments to farmers boosted the 2W category.
- A wide range of models, favorable weather, and positive market sentiment contributed to overall growth.
- Enhanced product acceptance, especially among the youth, and attractive financial options stimulated purchases.
Category-wise Performance:
- The 2W category reported a robust 28% YoY growth.
- The 3W category exhibited impressive growth at 36% YoY.
- Passenger Vehicle (PV) category saw a modest 3% YoY growth.
- Tractors (Trac) and Commercial Vehicles (CV) grew by 0.2% and 1.3% YoY, respectively.
Challenges and Outlook:
- The Kharmas period (16th Dec 2023 to 15th Jan 2024) is expected to lead to a slowdown in demand.
- While the 2W category maintains optimal inventory, the PV category faces challenges with high inventory levels.
- The near-term outlook remains positive, with a focus on launching new models and addressing inventory management.
- Prospects for CY’24 are positive, emphasizing strategic supply and inventory management.
Short-Term Outlook for January 2024:
- 2W category anticipates a positive trend post mid-January, driven by elections and improved customer sentiment.
- CV category poised for growth with strong demand continuing, especially after mid-January.
- PV category focuses on clearing pending bookings and launching new 2024 models, despite challenges in inventory management.
Long-Term Outlook for CY’24:
- Anticipation of a positive trajectory across categories with new model launches and better economic conditions.
- Increased government spending, infrastructural projects, and demand in key industries expected to drive growth.
Consumer Sentiment and Market Enthusiasm:
- Indian consumer sentiment, as indicated by the CMIE Index, has shown a remarkable rebound.
- Forecast for CY’24 is optimistic, with each sector within the auto retail industry positioned for growth.
Survey Findings:
- Average inventory for Passenger Vehicles ranges from 55-58 days, while Two-Wheelers range from 15-20 days.
- Liquidity is reported as good by 44.76% of respondents.
- Positive sentiment for January 2024 with 58.74% expecting growth.
Conclusion:
Despite the anticipated slowdown during the Kharmas period, the Indian auto retail industry maintains cautious optimism, leveraging new model launches and effective supply chain management. The rebound in consumer confidence sets a positive tone for CY’24, with strategic planning emphasized for sustained success.
