The Business Bytes
NEW DELHI, JULY 15, 2024 (TBB BUREAU): Driven by a spike in two-wheeler and three-wheeler sales, India’s automobile retail numbers posted a substantial growth of 9.4 per cent in the first quarter of 2024-25, compared to the same time last fiscal, said data shared by the Federation of Automobile Dealers Associations (FADA).
Two-wheelers (2W) led the charge with an impressive 12.56 per cent year-on-year (YoY) increase, followed by three-wheelers (3W) with an 11.36 per cent rise, passenger vehicles (PV) with a 2.53 per cent growth, and commercial vehicles (CV) growing by a mere 0.7 per cent. However, the tractor (Trac) segment faced a decline of 12.44 per cent.
The overall sales were seen at 6.19 million during the quarter under review, compared to 5.66 million during the first quarter of 2023-24. This year, the monsoon’s advancement up to Maharashtra was on track, but it lost momentum thereafter, delaying rains in key states such as West Bengal, Bihar, Uttar Pradesh, Chhattisgarh, and Madhya Pradesh, FADA said in its statement. This situation exacerbated the severe heatwave in northwest India, leading to a prolonged dry spell. The intensified heatwave not only delayed the sowing operations of kharif crops in northern and north-western regions but also adversely impacted rural sales.
“The recovery in the two-wheeler segment is promising, largely due to the emerging performance in rural areas, although these are early trends. The segment also faced significant challenges from extreme heat and the election period, resulting in a 13 per cent reduction in walk-ins during May and June. Conversely, the three-wheeler segment continues to perform well, driven by notable electrification,” said Manish Raj Singhania, president of FADA.
Commercial vehicles experienced a slowdown due to the electoral period and a pause in infrastructure projects. In April, elections dampened sentiment, causing delays in expansion plans. Additionally, limited financing options and regional challenges, such as water scarcity, further impacted performance.
“PV, already at an all-time high, is facing difficulties in maintaining high growth levels. We had anticipated that growth for this fiscal year would remain below 5 per cent. Despite strong bookings and customer flow, high competition, excess supply and discounting presented challenges for sustained growth,” he said. Dealers reported significant impacts from elections, extreme heat and market liquidity issues. The extreme heat led to an 18 per cent drop in showroom walk-ins in May, with inventory levels reaching an all-time high of 62 to 67 days by the end of June. Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to the extreme heat and delayed monsoons, resulting in 15 per cent fewer walk-ins.
“At the end of Q1, the PV segment has shown resilience but continues to face headwinds from environmental and market challenges,” he added.
“FADA remains committed to advocating for prudent inventory control, improved financing options and strategic planning to ensure the auto retail sector’s resilience and sustained growth. Our focus is on elevating the customer experience and revitalising dealer synergy as we continue to transform the future of auto retail in India,” said Singhania.
