The Indian Auto Retail sector witnessed a growth of 3.14% YoY, with significant growth of 5% and 17% in the 2W and 3W segments.
NEW DELHI, Apr 9 (The CONNECT) – The Indian Auto Retail sector experienced modest growth of 3.14% YoY during March 2024, data released by Federation of Automobile Dealers Associations (FADA) says.
The two-wheeler (2W) and three-wheeler (3W) segments saw increases of 5% and 17% respectively, while passenger vehicles (PV), tractors (Trac) and commercial vehicles (CV) faced declines of 6%, 3%, and 6% respectively.
The 2W segment demonstrated resilience and adaptability, with electric vehicle (EV) sales surging due to the expiration of the FAME 2 subsidy on March 31, said FADA President Manish Raj Singhania. This led to a notable boost in the 2W-EV market share to 9.12%.
Positive market sentiment was supported by seasonal events, improved vehicle supply, and financial incentives. Despite facing market volatility and intense competition, the industry is strategically evolving, particularly in the premium and EV categories, signalling a bright future.
The 3W segment showed an encouraging sales trend hitting an all-time high retail, driven by the growing acceptance of EVs. The introduction of EV autos and loaders positively impacted the retail environment. Although faced with election-related uncertainties and concerns over policy changes, such as free bus travel for women, the overall outlook for the sector remains upbeat, supported by the quality of vehicles and strong market demand.
The PV sector encountered challenges, with a MoM decrease of 2% and a YoY fall of 6%. The downturn was influenced by heavy discounting and selective financing further affected by economic worries and the electoral climate.
Nonetheless, positives such as improved vehicle availability, increased stock levels and new model launches did stimulate demand in certain areas. The impact of election activities and changes in festival dates also played a role in sales dynamics.
For the CV sector, March presented a complex scenario. The election announcement resulted in a temporary reduction in purchases, though there is an expectation of a recovery post-election, with decreasing concerns about the forthcoming monsoon.
The sector grappled with issues like recent declines, poor agricultural outcomes, discount pressures and financing difficulties. On the upside, there was strong demand in specific areas such as coal and cement transportation, bolstered by bulk orders and vehicle upgrades, which enhanced customer engagement.
With a notable decline in consumer sentiment among urban Indians, as reported by the Centre for Monitoring Indian Economy (CMIE), the automotive sector faces a nuanced challenge. This downturn, characterized by a restraint in discretionary spending within urban income brackets, adds a layer of complexity to the industry’s landscape.
In this scenario, the decision of the MPC of the RBI to keep lending rates unchanged at 6.5% would continue to badly impact the retail sales of all vehicles, especially entry level vehicles as these buyers are extremely price sensitive. Given the continued inflationary trend without any relief in finance rates, these prospective buyers may continue to hesitate.
Coupled with the forthcoming elections, these challenges will influence the industry, potentially curbing vehicle sales across all segments.
Despite this, opportunities for rebound and growth linger, bolstered by festive occasions and strategic product unveilings aimed at reviving consumer interest.
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