Auto retail sales jump 13%, PV sales scale record high in February

India’s automobile retail sales jumped 13 per cent in February to 2.03 million units, compared to 1.79 million units in February 2023, on the back of enhanced vehicle availability, improved demand due to economic conditions, and the impact of marriage season, according to Federation of Automobile Dealers Associations (FADA) data. However, the sector expects the upcoming Lok Sabha elections to play spoilsport in terms of sales due to potential deferred purchases across segments.

Among all the categories, passenger vehicles (PVs) saw a record-breaking February, with sales moving up by 12 per cent to 330,107 units as compared to 293,803 units in February last year. Every other vehicle category, including two-wheelers, three-wheelers, tractors, and commercial vehicles, registered growth rates of 13 per cent, 24 per cent, 11 per cent, and 5 per cent, respectively.

"The PV segment recorded a 12 per cent YoY growth, marking the highest February sales figures ever, driven by new product introductions and enhanced vehicle availability. Elevated inventory levels in the PV segment, remaining at 50-55 days, pose a significant concern, necessitating original equipment manufacturers to adjust production to reduce dealer carrying costs,” said Manish Raj Singhania, president of FADA.

On the other hand, the two-wheeler sector growth was mainly due to the rural sector, premium model demand, and strong entry-level segment performance, with broader product availability and compelling offers enhancing product acceptance. Factors like favourable marriage dates and improved economic conditions also contributed to this positive growth. During the month under review, two-wheeler sales were seen at 1.43 million, compared to 1.27 million during the same period last financial year.

"The 3W market surged by 24 per cent, with EVs making up 53 per cent of this growth, fuelled by first-time users and a shift towards Electric E-Rickshaws, alongside better market sentiment and consumer engagement,” Singhania said. In February, three-wheeler sales touched 94,918 units, compared to 76,619 units in February 2023.

The commercial vehicle segment grew by 5 per cent, overcoming challenges through fleet purchases and school buses, strong sectoral demand, and improved financing, despite obstacles like cash flow shortages and election-related purchase deferrals, highlighting the sector's resilience and gradual recovery. The segment saw sales of 88,367 units during the month, as against 84,337 units during the same period last year.

"The anticipation of elections casts a shadow over this positive scenario, with potential deferred purchases across segments. The commercial vehicle sector, in particular, might face a cautious approach from customers waiting for the outcome of general elections. Supply constraints further complicate the landscape, especially in the PV segment, where the availability of popular variants remains a concern. External factors like crop failures in rural areas could also dampen market sentiment and financial liquidity, posing additional hurdles to sustained growth,” Singhania added.