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Despite Small Car Sales, Two-wheelers Outperform: FADA

September brought a breath of fresh air for the Indian automotive retail sector, showcasing robust growth according to the latest data from the Federation of Automobile Dealers Associations (FADA). Year-on-year (YoY), auto sales soared by an impressive 20%, signaling a positive trajectory for the industry.

The report unveiled a mixed bag of performances, with the tractor segment being the sole exception, experiencing a 10% de-growth. In contrast, all other categories displayed significant growth, with two-wheelers leading the charge at a remarkable 22% increase in sales. Three-wheelers closely followed with an outstanding 49% surge, while passenger vehicles (PV) and commercial vehicles (CV) contributed to the positive trend with a 19% and 5% YoY growth, respectively.

Monthly dynamics also exhibited positivity, recording a 3.5% growth in total auto retail sales month-over-month (MoM). However, the tractor segment faced continued challenges, witnessing a 26% contraction MoM.

In comparison to the pre-pandemic period, the retail landscape reflected a robust 14% growth, showcasing a resilient recovery for the industry. Notably, the two-wheeler category hinted at a rural market resurgence, posting a 2% growth, indicative of increased consumer confidence.

The three-wheeler segment continued its momentum, achieving consecutive all-time high retail records. September witnessed sales surpassing the 1 Lakh unit mark, marking a staggering 49% YoY and 5% MoM growth.

However, the report raised a concern regarding unprecedented inventory levels for passenger vehicles, reaching an all-time high of 60-65 days, suggesting a cautious approach by dealers. This surge in inventory was attributed to dealers anticipating a robust 42-day festive period.

On a positive note, September’s rainfall patterns eased India’s drought concerns, with the country receiving 94% of expected rains. The India Meteorological Department (IMD) forecasts a ‘normal’ north-east monsoon for the October to December period, providing further optimism for agriculture-dependent rural markets.

With the festive season around the corner, FADA has shifted its stance from “cautiously optimistic” to “optimistic.” As the Shraadh period concludes and Navratri begins, coupled with dispelled monsoon worries and positive growth indicators, FADA anticipates a vibrant festive season for auto retail in India, further propelling the industry’s recovery.

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