CY2023 has been a good year for India Auto Inc and the real-world sales growth story is revealed in the retail sales figures released by the Federation of Indian Automobile Dealers Associations (FADA). A total of 2,38,67,990 vehicles across all segments (two- and three-wheelers, passenger vehicles, commercial vehicles and tractors) were sold in CY2023, up 11% year on year (CY2022: 2,14,92,324 units).
While two-wheeler demand rose 9.45% to 17 million units (CY2022: 1,55,88,352 units), three-wheeler retails at 10,80,653 units, crossed the million-units mark for the first time in a calendar year, jumping 58.50% YoY (CY2022: 681,812 units). Passenger vehicle sales maintained their double-digit growth at 3.86 million units, up 10.61% (CY2022: 34,89,953 units) and commercial vehicle sales took the growth road with sales of 994,330 units, up 8.28% (CY2022: 918,284 units). Tractor sales at 871,627 units were up 7.09% (CY2022: 813,923 units).
Commenting on December 2023 and CY2023 retails, FADA president Manish Raj Singhania said, “December’23 was an overall good month as total retails saw a growth of 21% YoY. All categories closed in the green, with two-wheelers, three-wheelers, PVs, tractors and CVs growing on a YoY basis by 28%, 36%, 3%, 0.2% and 1.3% respectively.
Similarly, for CY2023, the year ended with double-digit growth as total retails during the year saw an increase of 11% YoY. Here also, all categories closed in the green, with two-wheelers, three-wheelers, PVs, tractors and CVs growing on a YoY basis by 9.5%, 58.5%, 11%, 7% and 8% respectively.
In the two-wheeler category, key drivers included an abundance of marriage dates and the distribution of harvest payments to farmers, which enhanced purchasing power. Additionally, the availability of a wide range of models and variants, coupled with favourable weather conditions and a generally positive market sentiment, contributed to this robust growth. Enhanced product acceptance, particularly among the youth, and lucrative financial options, coupled with the anticipation of price increases in January 2024, spurred purchases.
The CV category experienced positive growth as increased industrial activity and infrastructure development continued to fuel demand for M&HCVs. The bus segment also saw a rise, particularly in tourism and transportation, aided by orders from various state transport departments. Additionally, robust liquidity in rural areas and the financial boost from crop sales supported customer purchases, although retail cases remained somewhat subdued despite some pre-buying in bulk.
In the PV category, SUVs in particular saw strong demand, with extended waiting periods for key models. This surge was fuelled by aggressive year-end promotions and the introduction of new models. However, a significant concern was the high inventory levels, reflecting over-supply. This ongoing issue of high PV inventory, despite a slight decrease by the year’s end, remains a critical area for OEMs to address, emphasizing the need for further moderation in inventory management.”
POSITIVE GROWTH TRAJECTORY IN CY2024
For CY2024, India Auto Inc should see positive growth trajectory across categories. According to Singhania, the two-wheeler industry “expects a boost from new model launches, especially in the first half of the year, and an overall better economic condition coupled with higher EV participation. Improved customer sentiments, due to factors like lower fuel prices and crop payments to farmers, are likely to drive demand.”
PVs are expected to see growth with new product launches and stable market sentiments. The market is hopeful about improved vehicle availability and demand driven by new models with many OEMs launching their EVs. However, caution should be exercised regarding excess inventory as well, he said.
As regards, CVs, the positive outlook is driven by expectations of increased government spending due to elections, infrastructural projects and demand in key industries like coal, cement, and iron ore. The market is also expected to benefit from the replacement of older vehicles.