Retail Automobile Sales Registers 14% Growth In February: FADA

Retail Automobile Sales Registers 14% Growth In February: FADA

Financial year-end activities traditionally spur purchasing across segments, yet the feedback from dealers highlights the nuanced challenges of inventory management, extremely aggressive target settings and evolving consumer preferences.

ANIUpdated: Thursday, March 07, 2024, 11:28 AM IST
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Retail Automobile Sales Registers 14% Growth In February: FADA | Representative Image

The Federation of Automobile Dealers Associations on Thursday released Vehicle Retail Data for February 2024.

According to the FADA data, Indian Auto Retail experienced a robust 13 per cent growth in February 2024 across all vehicle categories. 2 Wheeler, 3 Wheeler, PV, Tractors and CV sectors registered growth rates of 13 per cent, 24 per cent, 12 per cent, 11 per cent and 5 per cent respectively.

Two Wheeler segment

Two-Wheeler market growth of 13 per cent YoY was notably driven by the rural sector, demand for premium models and strong performance of entry-level segments.

Three Wheeler segment

The three-wheeler market saw a significant 24 per cent YoY increase, with EVs constituting 53 per cent of this growth, highlighting a shift towards electric vehicle.

Passenger Vehicles segment

The Passenger Vehicles segment recorded a 12 per cent YoY growth, marking the highest February sales figures ever, driven by new product introductions and enhanced vehicle availability. Elevated inventory levels in the PV segment, remaining at 50-55 days, pose a significant concern, necessitating OEMs to adjust production to reduce dealer carrying costs.

Commercial Vehicle sector

The Commercial Vehicle sector achieved a 5 per cent YoY growth, overcoming challenges such as cash flow shortages and election-related purchase deferrals.

According to the FADA outlook, the near-term outlook for March 2024 suggests cautious optimism, with potential growth driven by robust signals from the rural market and financial year-end buying activities.

"For the near-term outlook, the auto retail sector is influenced by a blend of positive trends and challenges. The rural sector's robust signals, along with an increased demand for premium and entry-level segments, are set to bolster the 2W market. Similarly, both the 3W and CV sectors anticipate a boost in sales, driven by the financial year-end rush and an infusion of funds into the market, which is expected to stimulate purchases. In the PV sector, the confluence of financial year-end buying incentives, improved availability of vehicles and seasonal factors such as marriages is likely to propel demand," FADA said in a release.

"However, the anticipation of elections casts a shadow over this positive scenario, with potential deferred purchases across segments. The commercial vehicle sector, in particular, might face a cautious approach from customers waiting for the outcome of general elections. Supply constraints further complicate the landscape, especially in the PV segment, where the availability of popular variants remains a concern. External factors like crop failures in rural areas could also dampen market sentiment and financial liquidity, posing additional hurdles to sustained growth," the release read.

Overall, the near-term outlook for March 2024 in the auto retail sector is one of cautious optimism. Financial year-end activities traditionally spur purchasing across segments, yet the feedback from dealers highlights the nuanced challenges of inventory management, extremely aggressive target settings and evolving consumer preferences. OEMs' ability to address these challenges through strategic product introductions, supportive dealer policies and adaptive sales strategies will be paramount in maintaining the sector's growth momentum and achieving success in the near term.

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