Retail auto sales robust in FY24, but March sales muted

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Automobile retail sales in India experienced robust growth during the 2023-24 period, according to a statement released by the Federation of Automobile Dealers Associations (FADA) on Monday. The sector witnessed a double-digit increase across various categories, driven by strong demand for passenger vehicles, three-wheelers, and tractors.

Total retail sales surged by 10 percent to reach 2,45,30,334 units in the last fiscal year, compared to 2,22,41,361 units in the previous fiscal year. FADA President Manish Raj Singhania highlighted the performance of the passenger vehicle, three-wheeler, and tractor segments, which achieved record-breaking figures, surpassing previous years’ records.

In March, the registrations grew 3% over lasta year, mostly driven by the two and three-wheelers. Two-wheeler sales grew 5.4% in March to 15,29,875 units. The passeneger vehicle and commercial vehicle segment dropped by 6.2% and 5.92%, respectively.

Passenger vehicle registrations rose to 39,48,143 units, marking an 8 percent rise over the previous fiscal year. Factors such as improved vehicle availability, an attractive model lineup, and the introduction of new models were instrumental in driving this growth. Singhania stressed the significant contribution of enhanced supply dynamics, strategic marketing efforts, and the burgeoning demand in the SUV segment to this success.

Three-wheeler retail sales witnessed a 49 percent increase, reaching 11,65,699 units, propelled by the introduction of cost-effective CNG fuel options, new EV models, and strong market sentiment. Tractor sales also showed a notable uptick, reaching 8,92,313 units, reflecting a growing demand in the agricultural sector.

Two-wheeler sales grew by 9 percent to 1,75,17,173 units, benefiting from improved model availability, positive market sentiment, and the recovery of rural markets post-COVID pandemic. The expansion of EVs and strategic launches in the premium segment played a pivotal role in overcoming challenges such as supply constraints and intensified competition.

Commercial vehicle registrations increased by 5 percent to 10,07,006 units, driven by improved vehicle supply and increased freight movement facilitating replacement purchases. Looking ahead to the current fiscal year, FADA anticipates growth in the Indian auto industry despite existing challenges.

Excitement surrounding new product launches, particularly in the electric vehicle segment, coupled with manufacturers’ efforts to strengthen supply chains and offer diverse models, sets a positive tone for the industry. Economic growth, favourable government policies, and anticipated good monsoon are expected to boost demand, particularly in rural areas and the commercial vehicle sector.

While market sentiment remains cautiously optimistic, FADA underscores the importance of improved customer engagement and financing schemes to stimulate sales. Despite challenges like a high base and intense competition, the passenger vehicle segment continues to evolve and adapt to changing market dynamics.