Indian Auto Sales Record 20 Per Cent YoY Growth In September 2023: FADA

In September 2023, the Indian automotive retail sector experienced significant year-on-year growth, with a robust 20 per cent increase in sales, according to data released by the Federation of Automobile Dealers Associations (FADA). This positive trend extended across most vehicle categories, except for trucks, which saw a decline of 10 per cent. Two-wheelers (2W) recorded a 22 per cent increase, three-wheelers (3W) soared by 49 per cent, passenger vehicles (PV) grew by 19 per cent, and commercial vehicles (CV) saw a 5 per cent uptick.

Manish Raj Singhania, President, FADA said, "September's Auto Retail celebrated a 20 per cent YoY leap, continuing the momentum from the previous month while marking a 3.5 per cent MoM increase, seamlessly transitioning into the festive period’s sweet spot set to unfold over the next 42 days.”

On a month-on-month basis, the industry continued to perform well, with a 3.5 per cent increase in total auto retail sales. However, the tractor segment continued to decline significantly, with a contraction of 26 per cent. Compared to the pre-pandemic period, the overall retail landscape showed substantial growth, with a 14 per cent increase. Notably, the 2W category registered a 2 per cent growth for the first time, potentially indicating a positive shift in rural markets.

The 3W segment maintained its momentum, setting consecutive all-time high retail records. In September, 3W sales reached 1,02,426 units, marking a remarkable 49 per cent year-on-year increase and a 5 per cent month-on-month growth, surpassing the 1 lakh mark.

Inventory levels for PV reached an all-time high of 60-65 days, suggesting that dealers are gearing up for a robust 42-day festive period. The favourable monsoon patterns in September alleviated concerns of drought, with India receiving 94 per cent of expected rains. The Indian Meteorological Department (IMD) forecasts a 'normal' north-east monsoon for the October to December period.

Looking ahead to the festive season, with the inauspicious Shraadh period ending on October 14, and Navratri commencing on October 15, FADA shifts its stance from "Cautiously Optimistic" to "Optimistic," anticipating a vibrant festive season for the Indian auto retail sector. This optimism is supported by the positive market response, increased demand, and favourable monsoon conditions.

As the festive season unfolds, it is expected that the 2W segment will see an uptick in sales, particularly with the introduction of new models and attractive promotional offers. The CV segment anticipates a resurgence in infrastructure projects and essential goods transportation as the monsoons cease, while the PV segment is expected to benefit from the launch of new products and improved availability of popular models.

However, given the unprecedented inventory levels in the PV category, caution is advised to avoid excessive inventory pushes, ensuring a stable and vibrant market during the festive period. Overall, the combination of positive indicators sets the stage for a thriving festive season in the Indian auto retail sector.

In addition to the retail data, an online members' survey conducted by FADA provided insights into inventory levels, liquidity, and sentiment among dealers. The survey revealed that inventory levels for passenger vehicles ranged from 60-65 days, while two-wheelers had an average inventory of 33-35 days. Dealers reported mostly neutral liquidity (49.24 per cent) and sentiment (44.66 per cent) levels, with a majority expecting growth (72.14 per cent) in October.