Auto dealers report roaring business in October: FADA

A positive market sentiment coupled with various attractive schemes from OEMs, as well as ready stock availability helped showrooms to move their products quickly.

By Mayank Dhingra calendar 16 Nov 2023 Views icon9668 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Auto dealers report roaring business in October: FADA

The festive season is particularly a critical period for the automotive industry of a culturally-rich India, where people tend to align purchases of their vehicles, generally considered the second-biggest assets after homes, to auspicious events and occasions like Navratri, Dussehra, and Diwali.

While the festivities this year commenced in August with Onam which is celebrated in South India, the celebrations have been spread over through to November, which marks the major Dhanteras and Diwali celebrations. However, with the latter two occurring in October in 2022, the overall industry retail at 2,117,596 units last month reflects a 7.73 percent year-on-year de-growth compared to 2,295,099 units retailed in the month of October 2022.

“The first fortnight of the month of October 2023 was dominated by the inauspicious Shraddh period which is poor for vehicle sales, and moreover, with Diwali falling in November, a year-on-year (YoY) assessment of the industry performance may not accurately reflect in the actual trajectory of growth in the Indian automotive retail sector,” Manish Raj Singhania, President, Federation of Automobile Dealers Associations (FADA), told Autocar Professional

“A month-on-month comparison, however, shows a 13 percent increase in overall industry retail in October 2023,” he added. While the two-wheeler segment bounced back strongly to register a 15 percent growth compared to September 2023, passenger vehicles (+7 percent), tractors (+15 percent), and commercial vehicles (+10 percent) – all recorded robust performance on a month-on-month basis.

The Navratri 2023 timeframe (October 15-24), particularly emerged as a milestone period, with vehicle sales soaring 18 percent on a YoY assessment compared to Navratri 2022. “The industry registered an all-time-high retail figure with strong performance across all vehicle categories, encompassing PVs, two-wheelers, three-wheelers, as well as commercial vehicles. The two-wheeler segment, which remained dull between April and August, started picking up around September and showcased a stellar performance by registering a strong 22 percent YoY growth during Navratri, with financial schemes and festive cheer being the key enablers,” Singhania said, while explaining that the commercial vehicle segment is also likely to continue its march with infrastructure development in full swing across the country.

“Therefore, we are quite optimistic about the festive season, and dealers are adequately stocked this time around as wait times, which, in the PV segment, had gone up to almost two years in 2022, have come down to around six months on an average for the models in strong demand,” he added. Singhania further hinted that better supplies, as well as consumer offers have played a key role in enabling the demand from consumers this festive season.

“The Navratri period paved a good road and we are certain that the hefty growth is bound to continue until Diwali. Both buyer and dealer sentiments are quite positive, with almost 90 percent of the dealers being confident about a good show until Diwali,” he said.

Need for caution ahead
With combined wholesales of 14 passenger vehicle OEMs being pegged at 391,147 units (October 2022: 336,428 / +16 percent) in October 2023, FADA, however, has cautioned about an excessively-high inventory build up that is understood to have soared in the range of 60-65 days in the PV segment. “We are worried about the PV dealer stock, which is at 65 days. The November dispatches from OEMs certainly need to come down for stock correction, else dealers are looking at challenging times to liquidate the inventory towards the year end,” Singhania pointed out.

He said that while a good harvest and increased MSPs by the government across crops have ensured higher disposable incomes in the rural economy during the festive season, the trend needs to be carefully monitored after the festive season. “As of now, most of the retail contribution is coming from urban, and semi-urban areas, and while the rural economy is better off compared to last year, it would need two quality-produce crop seasons for it to recover fully. The two-wheeler segment, therefore, remains on a close watch,” he said.

This feature was first published in Autocar Professional's November 15, 2023 issue.

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