November auto retail sales: Auto retail sales grow by 18% in Nov; 2-wheeler, passenger vehicles reach all-time high

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The Federation of Automobiles Dealers Associations (FADA) on Wednesday said that the auto sales in November grew by 18 per cent annually with a historic sale of 28.54 vehicles, surpassing March 2020 record of 25.69 vehicles.

The apex body also said that the record sales come amid the industry’s transition to BS-6 from BS-4 emission norms.

The FADA President, Manish Raj Singhaniya noted that November 2023 witnessed a strong surge in the PV category, primarily fuelled by Deepawali and the launch of new and appealing models along with improved supply chain channels.

“However, the period following the festivities saw a noticeable slowdown, coupled with a critical challenge of slow-moving inventory due to a mismatch in demand and supply which is still not resolved. This issue casts a shadow over the otherwise positive trends, highlighting the need for strategic adjustments in inventory management,” he added.

Further, the 2-wheelers segment and passenger vehicles (PV) reached an all-time high with 22.47 lakh and 3.6 lakh vehicles sold respectively. 2W grew by 21 per cent while the PVs registered a growth of 17 per cent on a year-on-year basis.

“For the 2W category, the month witnessed a significant boost in auto retail, thus making it clock all-time high retails, buoyed by the festive excitement of Deepawali and enhanced by strong rural sentiments, thanks to thriving agricultural income,” said Singhania.On a month-on-month basis the 2W category grew by a remarkable 49 per cent, and the PV segment grew by 2 per cent, leading the entire industry to a growth of 35 per cent MoM.”New product launches and better model supply further fuelled the market’s growth, while electric vehicle sales demonstrated an encouraging upward trajectory,” the FADA president said.

The 3-wheelers segment grew by 23 per cent with a sale of 99,890 units in the previous month as against 81,007 units during November 2022.

Meanwhile, Trac and CV segments witnessed a drop of 21 per cent and 2 per cent, driven by poor market sentiment.

“Seasonal slumps, exacerbated by unseasonal rains damaging crops and impacting transport demand, coupled with liquidity issues and delayed deliveries, further strained the industry. States going into elections also added to the woes, overshadowing the brief uplift from festive sales and the slight increase in tourism that helped in sales of buses,” Singhania stated

Marriage season to drive growth

The FADA highlighted that in the near term the 2W category will benefit from a liquidity boost, particularly in rural areas and the ongoing marriage season, with around 38 lakh marriages between November 23 to December 15, which is expected to drive vehicle sales.

However, poor rabi season due to extreme weather conditions may have an effect on the agriculture income, further affecting the auto sales, FADA added.

“In contrast, the CV category is expected to see some recovery, driven by renewed business activities post-elections and positive movements in key sectors like cement and coal. Backlogs in orders might also contribute to a sales boost,” the apex body for auto retail said.

Inventory concerns

Even though the current PV inventory stands just above 60 days, a a notable slowdown in demand and bookings post festivities has been anticipated. FADA has highlighted the need for OEMs to strategically reduce dispatches of slow-moving vehicles, especially in the entry-level category.

“Historically, it is recognized that holding inventory beyond 30 days starts to erode dealer profitability as the financial burden is intensified by the high interest costs of inventory funding from financial institutions,” said FADA.

However, as per FADA, the PV sector shows potential for growth with year-end offers and discounts expected to stimulate sales, along with an improved vehicle supply and new product launches.

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