The two-wheeler (2W) and passenger vehicle (PV) categories displayed remarkable performances, setting new all-time highs.
Automotive retails were at an all-time high in November 2023 reaching 28.54 lakh units, aided by the best ever monthly performance across passenger vehicle and two-wheeler segments. As per the data shared by Federation of Automobile Dealers Associations (FADA), the total retail sales surpassed the previous record set in March 2020, during the industry's transition from BS-IV to BS-VI emission norms, when 25.69 lakh vehicles were sold.
Record-Breaking Performance in 2W and PV
During the last month, two-wheeler sales reached historic highs at 22.47 lakh units, surpassing the previous record of 20.7 lakh units set in March 2020. Similarly, sales of Passenger Vehicles (PVs) or cars reached a zenith at 3.6 lakh units, exceeding the previous best figure of 3.57 lakh units in October 2022.
FADA President Manish Raj Singhania, in a press release, stated that for the two-wheeler category, the month witnessed a significant boost in auto retail, thus making it clock all-time high retails, buoyed by the “festive excitement” of Deepawali and enhanced by strong rural sentiments, due to thriving agricultural income.
“New product launches and better model supply further fuelled the market's growth, while electric vehicle sales demonstrated an encouraging upward trajectory,” stated Singhania.
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Singhania also revealed that November 2023 witnessed a strong surge in the PV category, which was primarily fuelled by Deepawali and the launch of “new and appealing models”. Additionally, the onset of the marriage season in certain pockets of the country during November acted as a catalyst for enhanced sales.
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“The improved supply chains, coupled with new launches, effectively catered to the festive demand, marking the peak point in sales. However, the period following the festivities saw a noticeable slowdown, coupled with a critical challenge of slow-moving inventory due to a mismatch in demand and supply which is still not resolved. This issue casts a shadow over the otherwise positive trends, highlighting the need for strategic adjustments in inventory management," noted Singhania.
It was reported recently that carmakers logged the best-ever November wholesales as demand for personal transport continues to remain strong, and the industry is poised for record sales in 2023. Industry analysts reckon that carmakers despatched around 3,35,354 units last month.
FADA noted that the PV sector shows growth potential, with year-end offers and discounts expected to stimulate sales, along with improved vehicle supply and new product launches.
"The current PV inventory, still above 60 days, underscores the need for Original Equipment Manufacturers (OEMs) to strategically reduce dispatches of slow-moving vehicles, especially in the entry-level category,” affirmed Singhania.
Historically, it is recognised that holding inventory beyond 30 days starts to erode dealer profitability as the financial burden is intensified by the high-interest costs of inventory funding from financial institutions, the industry body stated.
Overall Growth
November 2023 saw an overall growth of 18 percent YoY in total retail sales at 28,54,242 units as against 24,09,535 units in the same month last year.
Passenger vehicle (PV) retail sales rose to 3,60,431 units as compared to 3,07,550 units in the year-ago period, registering a growth of 17 per cent. Similarly, two-wheeler registrations rose by 21 percent last month to 22,47,366 units from 18,56,108 units in November last year. Three-wheeler retail sales rose to 99,890 units last month, registering a growth of 23 per cent from November 2022.
Tractor sales, however, witnessed a decline of 21 percent to 61,969 units in November from 78,720 units in the year-ago period. Similarly, commercial vehicle retail sales witnessed a dip of 2 percent year-on-year at 84,586 units last month. Singhania revealed that the CV category saw a challenging Nov’23, driven by poor market sentiment.
“Seasonal slumps, exacerbated by unseasonal rains damaging crops and impacting transport demand, coupled with liquidity issues and delayed deliveries, further strained the industry. States going into elections also added to the woes, overshadowing the brief uplift from festive sales and the slight increase in tourism that helped in sales of buses, maintained Singhania.
However, Singhania expects the CV category to see some recovery, driven by renewed business activities post-elections and positive movements in key sectors like cement and coal. In his view, backlogs in orders might also contribute to a sales boost.
Elaborating on the sales outlook, FADA claimed that in the near term, the 2W category is poised to benefit from a liquidity boost, particularly in agricultural regions and the ongoing marriage season, with around 38 lakh marriages expected to drive vehicle sales. However, it has acknowledged that challenges persist as severe weather conditions impacting Rabi cultivation might affect rural incomes, potentially dampening vehicle sales, it added.
Meanwhile, FADA representatives, in conversation with CNBC-TV18, express optimism for future auto retail sales. With the dealership inventory period currently at 60-64, the association anticipates robust growth in December.
Robust PV and 2W demand puts auto retail sales in fast lane in Nov 2023: FADA - Moneycontrol
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