Auto sales grew 6.6 per cent year-on-year in the month of January, as per Federation of Automobile Dealers Associations (FADA) data. The data is in line with FADA’s previous projections for a moderately positive January, it said.
The robust start was evident across all vehicle categories, including two-wheelers, three-wheelers, passenger vehicles, tractors, and commercial vehicles. Two-wheeler sales increased by 4.15% year-on-year and a notable 27.39% month-on-month, with urban markets expanding their share from 41.6 per cent in December to 43.7 per cent in January. New model launches, marriage season demand, and improved financing options were the key growth drivers, stated FADA. However, concerns about rising interest rates and rural liquidity challenges persist.
Passenger vehicle sales also exhibited significant growth, rising by 15.53% year-on-year and 58.77% month-on-month, partly due to December purchases registered in January. Urban areas saw an uptick in market share, but rural regions posted higher year-on-year growth. Dealers attributed this to improved demand and last year’s discounting strategies, which helped in shifting registrations.
Commercial vehicle sales grew by 8.22% year-on-year and surged 38.04% month-on-month, with urban markets outpacing rural growth. Higher freight rates and passenger carrier demand contributed to this performance, though low cash flow and strict financing policies pose challenges, especially in sluggish sectors like cement and coal.
Inventory levels have improved, dropping from 50 to 55 days, indicating a better supply-demand balance.
As February approaches, the sector maintains cautious optimism. According to a recent survey, 46 per cent of dealers anticipate growth, while 43 per cent expect sales to remain flat, and 11 per cent foresee a decline.
Positive factors such as the ongoing marriage season, new product launches, and strategic promotions are expected to sustain customer footfall. Nonetheless, challenges remain, including shorter working days, weak rural liquidity, inflationary pressures, and strict lending criteria.
FADA President, C S Vigneshwar said, “Even so, India’s Auto Retail stands poised for modest gains if these headwinds ease. With nearly half of surveyed dealers still expecting an uptick, a collective sense of optimism prevails, suggesting that the industry is ready to ride out near-term challenges and look forward to brighter days ahead.”