Retail auto sales up 13% MoM in October, but high inventory levels in PV a concern

• Overall auto sales decline 12.6% year-on-year in October, but sales surpass highs of 2017 Navratri by 18% in 2023, shows FADA data.
• The two-wheeler sales are up 15% in the same period. Strong rural demand and higher liquidity during elections to support demand in coming months.
• The commercial vehicle segment experienced robust bookings and a positive uptake in retail sales, buoyed by festive cheer and strategic price support.

Retail auto sales in October grew by a healthy 13% month-on-month but declined 12.6% year-on-year, according to data released by the Federation of Automobile Dealers Associations. Even though a like to like comparison is not correct as the first half of the month of October fell during the inauspicious Sharddh period. However, auto sales during the Navratri of 2023 have surpassed the peak sales seen during 2017 by 18%. While bookings portray a healthy trend, FADA has expressed concerns about the build up of inventory in the passenger vehicle segment, which now stands between 63-66 days.

Commenting on October retail sales data, FADA President, Manish Raj Singhania, said: "The month commenced under the shadow of the inauspicious Shraddh period, persisting until the 14th. Consequently, a YoY comparison may not accurately reflect the actual trajectory of growth in the Indian Auto Retail sector. When compared month-on-month, auto retail sales flourished, achieving a 13% increase, with contributions from all categories. Two-wheelers, three-wheelers, passenger vehicles, tractors, and commercial vehicles expanded by 15%, 2%, 7%, 15%, and 10%, respectively, underscoring the sector's robust growth momentum.”

The road ahead may be a tad slippery for passenger vehicles. A survey done by the industry association shows that the passenger vehicle segment is going through a tricky phase. While there may be a spike of bookings during the festive days, the shadow of year-end discounts looms over immediate sales. High inventory levels in PVs, at a critical 63-66 days range, demand urgent attention from OEMs.



The association has said that without substantial interventions and if Diwali sales don't rise to the occasion, the weight of unsold stock could lead to significant dealer distress, echoing FADA's concerns for potential industry-wide repercussions. Immediate and decisive action is imperative to counter the risk of a financial squeeze as the year closes.

Despite the concerns expressed by dealers across India, the month of October has shown some positive signs. The two-wheeler category during the Navratri period holds promise as sales were buoyed by festive cheer and stronger rural demand. Enhanced availability of models, especially those in high demand from the previous year, along with better financial schemes, contributed to a solid market momentum.

States going into elections also injected optimism into the market, leading to an increase in government spending and improved liquidity. Despite a shift in festival dates, with Diwali moving to November, the anticipation of the festive season stimulated purchase intent and dealers reported good stock preparation and robust ground efforts that led to an uptick in sales figures, showcasing a resilient and adaptive market.

The 3W segment continued the uptick in demand during Navratri, largely driven by competitive finance options and a significant rise in e-Rickshaw interest, signalling a healthy move towards electrification. October continued this positive trend with robust market sentiments and festive celebrations contributing to increased customer bookings.

The commercial vehicle segment experienced robust bookings and a positive uptake in retail sales, buoyed by festive cheer and strategic price support from manufacturers. The demand for light and small commercial vehicles surged, driven by infrastructure development activities and the need for vehicle replacement. Healthy demand was witnessed especially in segments like cement, iron ore and coal transport. The festive seasons, including Navratri, catalysed market activity, with customers taking advantage of favourable finance schemes.

The PV segment navigated a complex landscape, marked by both enthusiasm and caution. During Navratri, despite regional variability, the industry witnessed a surge in bookings, buoyed by the introduction of compelling new models, particularly SUVs and the availability of attractive consumer offers. However, the impact of local elections and market saturation meant that the festive spirit didn't translate uniformly into sales across all regions. Throughout the month, the anticipation for Diwali in November and the launch of new models generated a steady demand. The period overall saw a resilient PV market, supported by a stronger product line-up unlike last year, when stock availability was a major issue."