After 21% growth in FY23, auto sales to hit slow lane in FY24: FADA

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After 21% growth in FY23, auto sales to hit slow lane in FY24: FADA
Source: Pixabay
  • FY23 was the first full year that saw no Covid impact in the last two years, and auto sales grew in double digits.

  • It would be tough for the auto sector to replicate FY23 sales growth in FY24 due to many factors, says FADA.

  • The 2W segment sales fell to a seven-year low in FY23 with total retails of 15.9 million.

  • While passenger vehicles sales hit a record high in FY23, inquiries are slowing down.
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After March clocked in a 14% year-on-year growth in overall vehicle sales, auto sales for FY23 registered an impressive double digit growth, as per data by Federation of Automobile Dealers Associations (FADA).

FY23 was the first full year that saw no Covid impact in the last two years, and overall auto sales grew by 21%. All segments with the exception of tractors exhibited double digit growth.

Two-wheelers, three-wheelers, passenger vehicles, and commercial vehicles grew at 19%, 84%, 23%, and 33% respectively, while tractors grew at 8% for FY23.

In spite of the impressive year-on-year growth, the 2W segment sales fell to a seven-year low with total retails of 15.9 million during the year. EV penetration in this category during the year was at 4.5%.

The three-wheeler category maintained its impressive growth rate of 84%, and electrification in this category reached 52%, driven by robust e-rickshaw sales. “The availability of finance, along with the availability of alternative fuels and state subsidies, has contributed to the growth of this segment,” said Manish Raj Singhania, president, FADA.

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Passenger vehicles exhibited impressive growth with retail sales hitting a record high of 3.9 million in FY23, crossing the previous high seen in FY19 at 3.2 million.

“The segment experienced numerous new launches and better product availability due to the easing of the semiconductor shortage during the year. The demand for higher-end variants helped sustain sales. However, the entry-level variant remains under pressure as customers in this category are still affected by high inflation,” said Singhania.

‘FY24 to be a year of consolidation’

The impressive sales seen in FY23 might however not carry on to the new financial year, the industry body says. The fiscal year 2024 is expected to witness a moderate growth rate in the low single digits. This can be attributed to a high base, inflationary pressures, routine price hikes, and regulatory changes.

“Furthermore, the year will see high penetration of electric vehicles (EVs), which will eat into the market share of internal combustion engine (ICE) vehicles. FY24 is predicted to be a year of consolidation for the Indian auto retail industry, with an overall single-digit growth compared to the previous year,” FADA said.

India’s auto sales will also have to weather many storms this year, literally and figuratively. “US Government agencies have warned for the third consecutive month about the possibility of El Niño's arrival later in the year, which could lead to poor monsoons and adversely affect rural India's growth potential,” said FADA.
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The recent untimely rains and hailstorms in North and Central India have destroyed crucial rabi crops and delayed harvesting, negatively impacting rural sales. Even in FY23, two-wheeler and tractor sales figures show that there has been pressure in rural sales.

Rural growth struggles in March too

Even as of March, there is little indication that sales from rural areas have been improving. High inflation has hit rural sales hard around the same time last year.

Two wheeler sales are yet to reach pre-pandemic levels, in spite of exhibiting a year-on-year growth of 12% in March. As compared to pre-Covid levels, they are still down by 9%.

The retail sales of the 3-wheeler segment for March reached an all-time high by increasing by 69% and exceeding the previous peak sales in March 2020. This month marked the industry's transition from BS-4 to BS-6.

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The passenger vehicle category experienced a year-on-year growth of 14%, thanks to improved supplies and increased sales, particularly at the higher end of the price range.

Additionally, the rise in prices of OBD2A vehicles and multiple festivals in the month contributed to healthy sales of PVs. Although sales remain strong, the level of inquiries has started to decline.

Starting from April 2023, all passenger vehicles will be required to install an onboard diagnostics device called OBD-2 to help continuously monitor the vehicle's emission levels real-time.


CATEGORYMAR'23MAR'22YoY % (2022)
2W14,45,86712,86,10912.42%
3W86,85751,48368.71%
E-RICKSHAW (P)37,37320,75680.06%
E-RICKSHAW WITH CART (G)3,2502,33839.01%
3W (GOODS)10,5418,04331.06%
3-W (PASSENGER)35,61120,25775.80%
THREE WHEELER (PERSONAL)8289-7.87%
PV3,35,2662,93,01614.42%
TRAC81,06778,0703.84%
CV92,79084,12410.30%
LCV49,74550,200-0.91%
MCV6,0505,11618.26%
HCV33,11926,24726.18%
Others3,8762,56151.35%
Total20,41,84717,92,80213.89%

Source: FADA

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