India's Retail Car Sales Were Up 12.5% MoM in October Despite Falling 8% YoY.

In October, which is a festive month, retail vehicle sales in India fell by approximately 8% year over year, according to data released on Monday by the Federation of Automobile Dealers Associations (FADA).

Vehicle sales experienced an 8% YoY decline in the first half of October 2023, which coincided with the Shraddh period, when people generally avoid making large purchases. This decline is likely what suppressed the overall monthly figures.

However, data indicated that automobile sales increased 12.5% month over month. This table shows the retail sales numbers for October across a number of vehicle categories. But with celebrations still going strong, every car category saw growth each month. According to FADA data, the growth rates for two-wheelers (2W), three-wheelers (3W), passenger vehicles (PV), tractors (Trac), and commercial vehicles (CV) were 15%, 2%, 7%, 15%, and 10%, respectively, on a month-over-month basis. All categories saw gains during Navratri days, with the exception of tractors. Tractor sales decreased by 8%, while growth in two-wheelers, three-wheelers, commercial vehicles, and passenger cars was 22%, 43%, 9%, and 6.5%, respectively.

The unfavourable Shraddh period persisted until the 14th of the month, casting a shadow over the beginning of the month. As a result, a year-over-year comparison might not fairly depict the true growth trajectory of the Indian auto retail industry. Auto Retails saw a 13 percent increase in comparison to MoM, with contributions coming from every category. According to FADA President Manish Raj Singhania, "two-wheelers, three-wheelers, passenger cars, tractors, and commercial vehicles expanded by 15%, 2%, 7%, 15%, and 10%, respectively, highlighting the sector's robust growth momentum."

Furthermore, the FADA reported that dealerships are expressing capacity concerns as a result of the passenger vehicle inventory levels reaching an all-time high of 63–66 days.

The FADA stated that it has raised a red flag and that automakers should immediately launch more alluring and aggressive programmes in addition to limiting the number of vehicles dispatched.

This combined strategy is necessary to assist dealers in getting rid of excess unsold stock before the end of the year and avoid any possible financial consequences, it stated.

Sectoral outlook: As year-end draws near, FADA anticipates a mix of highs and lows for the auto industry. Despite supply concerns, celebrations and the harvest season—particularly paddy—are predicted to increase two-wheeler sales. This optimism is fueled by new initiatives and a push towards electrification.

November is predicted to be a good month for commercial vehicles due to the combination of expected financial schemes and increased demand from construction and holiday celebrations.

Still, the passenger car market is going through a challenging time. Holiday weekends may increase reservations, but year-end savings loom large over short-term revenue, according to FADA. It emphasised that manufacturers must take immediate action in response to high PV inventory levels, which are in the crucial range of 63 to 66 days.

"The weight of unsold stock could lead to significant dealer distress without significant interventions and if Diwali sales don't rise to the occasion, echoing FADA's concerns for potential industry-wide repercussions." In order to mitigate the possibility of a financial crunch as the year draws to a close, FADA stated that swift and decisive action is essential.

Source :- (BW) AND (ANI)