Retail auto sales grow by 13% in February, but elevated inventory levels a concern

• The Indian auto industry reported a 13% year-on-year increase in sales in February 2024, while reporting a 4.6% month-on-month decline.
• All vehicle segments reported a year-on-year growth in sales during the month of February 2024.
• While the increase in sales is a positive, the elevated inventory levels are a concern, as per FADA.

The Indian auto industry reported a 13% growth in sales in February 2024, with all the segments reporting a growth during the month as per a report by the Federation of Automobile Dealers Associations (FADA).

While all segments such as the passenger vehicle segment, two-wheelers, three-wheelers, commercial vehicles and tractors reported a year-on-year increase in sales, there was a month-on-month decline, meaning the sales were higher in January 2024.

February 2024 auto sales data

Category	February 2024	YoY change	MoM change
Two-wheeler	14,39,523	13.25%	-1.32%
Three-wheeler	94,148	23.88%	-2.82%
Passenger vehicles	3,30,107	12.36%	-16.06%
Tractors	76,626	11.00%	-13.58%
Commercial vehicles	88,367	4.78%	0.94%
Total	20,29,541	13%	-4.61%

Source: FADA

Passenger vehicles report record numbers

According to the report, the passenger vehicle segment reported a 12% year-on-year growth in February 2024, achieving the highest sales figures ever recorded for the month of February. This was reportedly fuelled by the launch of new vehicles and the availability of vehicles at showrooms.

However, FADA has pointed out that persistent elevated inventory levels, which are currently at 50-55 days, present a slight concern. The report states that OEMs should adjust the production to mitigate the high inventory levels. High inventory levels increase the financial burden on dealers.

Two wheelers receive a boost from rural sector

The two-wheeler segment reported a 13.25% year-on-year growth in February 2024 but reported a decline of 1.32% when compared to January 2024. The growth in this segment was driven by increased demand from the rural sector, demands for premium models and the strong performance of entry-level models.

Three-wheelers get an electric boost

The three-wheeler segment reported a growth of 24% year-on-year in February 2024, with electric vehicles making up 54% of this growth. The growth in this segment was driven by first-time users and a shift towards electric e-rickshaws.

Outlook cautiously optimistic

The near-term outlook in the auto sector is cautiously optimistic. All the sectors are optimistic about increased demands amid the rural sector's robust signals, e financial year-end rush and infusion of funds into the market. The anticipation of elections however casts a shadow, especially in the commercial vehicles segment.

“External factors like crop failures in rural areas could also dampen market sentiment and financial liquidity, posing additional hurdles to sustained growth,” said FADA.

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