FADA said it has issued a red flag, urging manufacturers to not only moderate vehicle dispatches but also to introduce more aggressive and attractive schemes promptly. File.
| Photo Credit: NAGARA GOPAL
Retail vehicle sales across India declined around 8% year-on-year in the festive month of October, data released by the Federation of Automobile Dealers Associations (FADA) showed on November 6. The first half of October 2023, marked by the Shraddh period when people largely stay away from big-ticket purchases, saw an 8% YoY decline in vehicle sales, which has likely suppressed the overall monthly figures.
On a month-on-month, automobile sales though rose 12.5%, data showed. With ongoing festivities, all automotive categories, however, experienced momentum on a monthly basis. Two-wheelers (2W), three-wheelers (3W), passenger vehicles (PV), tractors (Trac) and commercial vehicles (CV) grew by 15%, 2%, 7%, 15% and 10% respectively on a MoM basis, FADA data showed. During Navratri days, all categories except tractors saw gains. Two-wheelers, three-wheelers, commercial vehicles and passenger vehicles grew by 22%, 43%, 9% and 6.5%, respectively, while tractors faced an 8% decline.
“The month commenced under the shadow of the inauspicious Shraddh period, persisting until the 14th. Consequently, a YoY comparison may not accurately reflect the actual trajectory of growth in the Indian Auto Retail sector. When compared to MoM, Auto Retails flourished, achieving a 13% increase, with contributions from all categories. Two-wheelers, three-wheelers, passenger vehicles, tractors, and commercial vehicles expanded by 15%, 2%, 7%, 15%, and 10%, respectively, underscoring the sector’s robust growth momentum,” FADA President, Manish Raj Singhania. Further, with passenger vehicle inventory levels soaring to an all-time high of 63-66 days, FADA said dealerships are signalling capacity concerns.
FADA said it has issued a red flag, urging manufacturers to not only moderate vehicle dispatches but also to introduce more aggressive and attractive schemes promptly. This dual approach is essential to help dealers clear their inventory before year-end, averting the potential financial repercussions associated with excess unsold stock, it said.
Sectoral outlook
FADA believes the near-term outlook for the auto sector is a blend of highs and lows as it approaches year-end. Festivities along with harvest season (especially paddy) are expected to boost two-wheeler sales, with optimism fuelled by new schemes and a push towards electrification, despite supply concerns. Commercial vehicles are looking at a strong November, with festive and construction activities enhancing demand, alongside anticipated financial schemes.
However, the passenger vehicle segment is navigating through a tricky phase. Festive days might spike bookings, yet the shadow of year-end discounts looms over immediate sales, FADA noted. High inventory levels in PVs, at a critical 63-66 days range, demand urgent attention from manufacturers, it reiterated. “Without substantial interventions and if Diwali sales don’t rise to the occasion, the weight of unsold stock could lead to significant dealer distress, echoing FADA’s concerns for potential industry-wide repercussions. Immediate and decisive action is imperative to counter the risk of a financial squeeze as the year closes,” FADA said.