The near-term outlook for the auto sector is a blend of highs and lows as it approaches year-end, but festivities along with the harvest season (especially paddy) are expected to boost two-wheeler (2W) sales, with optimism fuelled by new schemes and a push towards electrification, despite supply concerns.

Commercial vehicles (CVs) are looking at a strong November, with festive and construction activities enhancing demand, alongside anticipated financial schemes, the Federation of Automobile Dealers Associations (FADA) said .

“However, the passenger vehicle (PV) segment is navigating through a tricky phase. Festive days might spike bookings, yet the shadow of year-end discounts looms over immediate sales. High inventory levels in PVs, at a critical 63-66 days range, demand urgent attention from original equipment manufacturers (OEMs),” Manish Raj Singhania, President, FADA, said while sharing the monthly retail sales numbers on Monday.

Without substantial interventions and if Diwali sales don’t rise to the occasion, the weight of unsold stock could lead to significant dealer distress, echoing FADA’s concerns for potential industry-wide repercussions, he said adding that immediate and decisive action is imperative to counter the risk of a financial squeeze as the year closes.

Talking about sales in October, he said the PV segment navigated a complex landscape, marked by both enthusiasm and caution. During Navratri, despite regional variability, the industry witnessed a surge in bookings, buoyed by the introduction of compelling new models, particularly sports utility vehicles (SUVs) and the availability of attractive consumer offers.

Navratri of 2023 marked a milestone with retail sales soaring by 18 per cent YoY, surpassing the figures of Navratri 2017. Except for tractors, which saw an 8 per cent decline, all categories exhibited commendable growth. Two-wheelers, three-wheelers, commercial vehicles, and passenger vehicles experienced increases of 22 per cent, 43 per cent, 9 per cent and per cent, respectively.

“However, the impact of local elections and market saturation meant that the festive spirit didn’t translate uniformly into sales across all regions. Throughout the month, the anticipation for Diwali in November and the launch of new models generated a steady demand. The period overall saw a resilient PV market, supported by a stronger product line-up unlike last year, when stock availability was a major issue,” Singhania said.

In October, the PV retail sales declined by 1.36 per cent year-on-year (y-o-y) to 3,53,990 units as compared with 3,58,884 units in corresponding month last year.

Two-wheeler sales also declined by 12.60 per cent y-o-y to 15,07,756 units during the month as against 17,25,043 units in October 2022.

However, three-wheeler (3W) sales grew by 45.63 per cent y-o-y to 1,04,711 units last month as compared with 71,903 units in the same month of the previous year. CV sales also grew 10.26 per cent y-o-y to 88,699 units in October as compared with 80,446 units in corresponding month last year.

Tractor sales grew by 6.15 per cent y-o-y to 62,440 units as compared with 58,823 units in October 2022, the report said.

But, due to the decline in sales of 2W and PVs, the total sales across all categories declined by 7.73 per cent y-o-y to 21,17,596 units during the month as compared with 22,95,099 units in October 2022, the FADA report added.

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