The Federation of Automobile Dealers Associations (FADA) unveiled the Vehicle Retail Data for March’24 and FY’24.
March’24 Retails
In March 2024, the Indian Auto Retail sector experienced modest growth of 3.14% YoY, reported Mr. Manish Raj Singhania, FADA President. Noteworthy increases of 5% and 17% were observed in the two-wheeler (2W) and three-wheeler (3W) segments, respectively. However, passenger vehicles (PV), tractors (Trac), and commercial vehicles (CV) faced declines of 6%, 3%, and 6%, respectively.
Mr Singhania emphasized the resilience of the 2W segment, attributing the surge in electric vehicle (EV) sales to the expiration of the FAME 2 subsidy on March 31st. This led to a significant boost in the 2W-EV market share to 9.12%. Despite market volatility and intense competition, the industry is strategically evolving, particularly in the premium and EV categories.
The 3W segment witnessed encouraging sales, hitting an all-time high in retail, propelled by the growing acceptance of EVs. Election-related uncertainties and policy changes, such as free bus travel for women, pose challenges, but the sector remains optimistic, supported by vehicle quality and robust market demand.
While the PV sector encountered challenges with an MoM decrease of 2% and a YoY fall of 6%, certain positives such as improved vehicle availability and new model launches stimulated demand in specific areas.
For the CV sector, March presented a complex scenario with a temporary reduction in purchases due to election announcements. However, strong demand in sectors like coal and cement transportation buoyed the industry, despite challenges like recent declines and financing difficulties.
FY’24 Retails
Reflecting on FY’23, Mr Singhania commented on the commendable double-digit growth of 10% YoY across all categories in the Indian Auto Retail sector. Notably, the 3W, PV, and Trac segments set new record highs, surpassing previous years’ performances.
In FY24, the 2W segment saw a 9% growth driven by factors like enhanced model availability, new product introductions, and positive market sentiment. The growth in EVs and strategic launches in premium segments also played critical roles, overcoming challenges such as supply constraints and heightened competition.
The 3W segment’s growth soared to 49% YoY, setting a new benchmark fueled by cost-effective CNG fuel options, new EV models, and strong market sentiment. The PV segment achieved an 8.45% YoY growth, reaching an all-time high, propelled by improved vehicle availability and strong demand in the SUV segment.
The CV segment demonstrated a 5% growth, showcasing strategic response to diverse market dynamics, improved vehicle supply, and effective planning.
Near-Term Outlook
Amid a notable decline in consumer sentiment among urban Indians, the automotive sector faces nuanced challenges. The decision of the RBI’s MPC to keep lending rates unchanged at 6.5% may impact retail sales, especially for entry-level vehicles. Coupled with forthcoming elections, these challenges could influence the industry, potentially curbing vehicle sales across all segments. However, opportunities for rebound and growth persist, bolstered by festive occasions and strategic product unveilings aimed at reviving consumer interest.
Long-Term Outlook
Heading into FY’25, the Indian Auto Industry is poised for growth amidst a mix of optimism and challenges. New product launches, particularly electric vehicles, set a forward-looking tone. Economic growth, favorable government policies, and an anticipated good monsoon are expected to fuel demand, especially in rural areas and the commercial vehicle sector.
Market sentiment is cautiously optimistic, with the industry focusing on improved customer engagement and financing schemes to boost sales. Overcoming hurdles with innovation and strategic market engagement remains paramount, aiming for balanced growth across all segments.
Key Findings from our Online Members Survey:
- Liquidity: Neutral 48.93%, Good 39.64%, Bad 11.43%
- Sentiment: Neutral 45.71%, Good 39.29%, Bad 15.00%
- Expectation from Apr’24: Growth 56.43%, Flat 32.50%, De-growth 11.07%
- Expectation from FY’25: Growth 72.14%, Flat 20.36%, De-growth 07.50%
