Bhoomika Singh
The Federation of Automobile Dealers Associations (FADA) released its much-awaited report on Vehicle Retail Data for the month of July 2023, revealing a continued positive growth trajectory in the Indian automotive market. Despite facing several challenges, the sector displayed resilience, maintaining a steady 10 per cent year-on-year (YoY) growth rate, matching the previous month’s performance. The report provided valuable insights into the performance of various vehicle categories and their trends.
Positive YoY Growth Across Vehicle Categories
The data showed that all vehicle categories reported encouraging figures, contributing to the overall positive YoY growth. The Two-Wheeler segment (2W) registered an 8 per cent increase, while the Three-Wheeler segment (3W) witnessed an impressive 74 per cent YoY growth. Passenger Vehicles (PV) recorded a modest 4 per cent rise, Tractors (Trac) experienced a robust 21 per cent increase, and Commercial Vehicles (CV) closed with a slight 2 per cent growth.
Monthly Analysis Reveals Mixed Results
While the YoY growth remained constant, the month-on-month (MoM) analysis provided a mixed picture. The overall retail sales saw a 5 per cent decline in July. The Three-Wheeler segment (3W) was an exception, demonstrating a commendable 9 per cent MoM growth. However, categories like Two-Wheelers (2W), Passenger Vehicles (PV), and Tractors (Trac) experienced reductions of 6 per cent, 4 per cent, and 8 per cent, respectively. The Commercial Vehicles (CV) segment showed a flat growth of -0.2 per cent MoM.
Performance Versus Pre-COVID Levels
The report also assessed the automotive market’s performance concerning pre-COVID levels. Overall retails showed a 13 per cent decline when compared to the figures before the pandemic. The Two-Wheeler segment (2W) struggled the most, witnessing a significant 23 per cent dip. Commercial Vehicles (CVs) also underperformed, experiencing a 4 per cent contraction.
Three-Wheeler Segment Shines
July proved to be a remarkable month for the Three-Wheeler segment (3W), achieving an all-time high sale of 94,148 units. This translated to a remarkable 74 per cent YoY and 9 per cent MoM growth, indicating a robust demand for this category.
Inventory Insights
The report shed light on the current inventory situation in the automotive market. Passenger Vehicles (PV) were observed to have surpassed the 50-day mark, with inventory levels currently ranging between 50-55 days. This suggests an inventory build-up by dealers in anticipation of the forthcoming festive season, when demand is expected to rise.
Agricultural Forecast
The Indian Meteorological Department (IMD) has predicted below-average rainfall for the month of August. This raises concerns about potential reduced yields of kharif crops, which may impact the immediate resurgence of rural demand for vehicles.
FADA’s Stance
Despite the challenges, FADA remains cautiously optimistic about retail growth prospects, especially with the festive season just around the corner. The anticipation of increased consumer demand during the festive period brings hope for a recovery in the automotive market.
Reflecting on July 2023, FADA President, Manish Raj Singhania said, “Auto retail grew 10 per cent YoY in July, mirroring last month’s trend. However, the MoM decline continued highlighting short-term slowdowns. Despite challenges like heavy monsoons and a tilt towards EVs due to high fuel prices, 2W showed resilience in July ’23, with increased demand and trust in reputable brands. The 3W segment’s record numbers indicate industry potential and a growing EV interest. Yet, addressing issues like OEM support and dealer engagement remains crucial.”
