Festive season brought cheers to auto industry across segments: ICRA

The recently concluded festive season brought cheer to the automotive industry, with retails across the various segments remaining strong and representing moderate-to-healthy growth on a year on year basis, rating agency ICRA said in its latest sectoral update. 

The report noted that even as retails at the start of the festive period (during Navratri) remained relatively modest, there was a healthy pick up in sales during Diwali.

In the two-wheeler segment, the auto industry witnessed a robust 21% year-on-year growth aided by festive cheer, the upcoming marriage season, and some recovery in rural demand, which supported sales growth in the entry-level segment of  110 cc.

Crucially, the dealer inventory levels remained at near normal levels, with the OEMs wary of a build up in inventory at the dealerships. The industry is expected to record a moderate growth in volumes in FY 2024 of 4-7%, even as export volumes remain impacted by weak demand.

Secondly, passenger vehicle retail sales grew at a moderate pace of 6% (year on year) to 6 lakh units,  even on a high base of the previous year, aided by the introduction of new models and competitive financing rates. Even as retails during Diwali remained healthy, the inventory levels remained high, especially for entry-level vehicles The industry is expected to record a moderate growth in volumes in FY 2024 6- 9%, and reach an all-time high during this period.

Furthermore, the retail sales of commercial vehicles grew at a healthy pace of 15% on the back of the sustenance of a supportive macroeconomic environment and healthy infrastructure activity. Aided by favourable demand drivers, the industry volumes are expected to reach near the pre pandemic peak with a modest growth outlook of 2 -4 percent year on year, the report added.