Auto sales saw a modest growth of 3.14 per cent on-year in the month of March, according to the latest data by Federation of Automobile Dealers Associations (FADA). The FADA data showed that two-wheeler and three-wheeler segments saw growth of 5 per cent and 17 per cent. The month also witnessed a growth in the sales of electric vehicles (EV), with 2W-EV market share jumping to 9.12 per cent for the first time.
MARCH AUTO SALES
However, the passenger vehicle (PV) sales are a spot of bother for the automakers as it witnessed a downturn of 2 per cent on-month in March and 6 per cent on-year sales decline.
FADA stated that the two-wheeler segment showcased resilience even amid economic concerns, election uncertainties and intense competition. It showed “strategic evolution”, especially in the premium and electric vehicles.
As for the three-wheeler segment, the increasing acceptance of EVs has driven its growth, showing an optimistic trend despite potential challenges from election uncertainties.
The commercial vehicle (CV) segment that fell by 6 per cent on-year balanced election-induced purchase slowdowns with strong demand in specific sectors like coal and cement transportation, stated FADA.
FADA President Manish Raj Singhania said, “The two-wheeler (2W) and three-wheeler (3W) segments saw increases of 5 per cent and 17 per cent respectively, while passenger vehicles (PV), tractors (Trac) and commercial vehicles (CV) faced declines of 6 per cent, 3 per cent, and 6 per cent respectively. The 2W segment demonstrated resilience and adaptability, with electric
vehicle (EV) sales surging due to the expiration of the FAME 2 subsidy on March 31st. This led to a notable boost in the 2W-EV market share to 9.12 per cent.”
Singhania added that positive market sentiment was supported by seasonal events,
improved vehicle supply, and financial incentives. “Despite facing market volatility and intense competition, the industry is strategically evolving, particularly in the premium and EV categories, signalling a bright future. The 3W segment showed an encouraging sales trend hitting an all-time high retail, driven by the growing acceptance of EVs. The introduction of EV autos and loaders positively impacted the retail environment,” he said.
FY24 AUTO SECTOR SALES
However, FY24 saw significant highs with auto sales achieving a 10 per cent on-year growth. Two-wheelers saw 9 per cent, three-wheelers 49 per cent, passenger vehicles 8.45 per cent, tractors 8 per cent and commercial vehicles 5 per cent growth.
The three-wheelers segment set a new benchmark, fuelled by the introduction of cost-effective CNG fuel options and new EV models, alongside strong market sentiment and seamless integration of high quality after-sales service.
FY24 was a milestone year for PVs, stated FADA. “Factors such as improved vehicle availability, a compelling model mix and the launch of new models played pivotal roles. Enhanced supply dynamics, strategic marketing efforts, ever expanding quality road infrastructure and strong demand in the SUV segment, now holding a 50 per cent market share, significantly contributed to this success,” it added.
NEAR- AND LONG-TERM OUTLOOK FOR AUTO SECTOR
Auto sector faces a nuanced challenge with a notable decline in consumer sentiment among urban Indians due to a restraint in discretionary spending. Reserve Bank of India’s decision to keep repo rates unchanged at 6.50 per cent would continue to “badly impact retail sales of all vehicles, especially entry level vehicles” as these buyers are extremely price sensitive, stated FADA.
“Given the continued inflationary trend without any relief in finance rates, these prospective buyers may continue to hesitate. Coupled with the forthcoming elections, these challenges will influence the Industry, potentially curbing vehicle sales across all segments,” the FADA report added. However, festive occasions and strategic product unveilings would revive consumer interest, it said.
“Heading into FY’25, the Indian Auto Industry is poised for growth amidst a mix of optimism and challenges. The excitement around new product launches, particularly electric vehicles, sets a forward-looking tone. Manufacturers are gearing up with better supply chains and an array of models to meet diverse consumer demands. Economic growth, favourable government policies and an anticipated good monsoon are expected to fuel demand, especially in rural areas and the commercial vehicle sector, which is closely linked to infrastructure projects and economic activity,” stated FADA for the lon-term outlook.
