Multiple festivals like Holi, Ugadi, Gudi Padwa and Navratri in the coming days will help push auto sales in March, Federation of Automobile Dealers Associations (FADA) said on Monday.

Apart from the festival buys, factors such as better availability of vehicles in the last month of the financial year, a change in on-board diagnostics (OBD) norms from April, which could vehicle prices increase in the coming months, and a possible rollout of schemes by original equipment manufacturers (OEMs), would also aid higher sales in March, Manish Raj Singhania, President, FADA said.

However, FADA remains cautious on the medium-term outlook for auto sales, till IMD announces a better monsoon forecast, Singhania added.

PV sales up

As per FADA’s monthly sales data, passenger vehicle (PV) retail sales grew by 11 per cent year-on-year (YoY) to 2,87,182 units in February compared with 2,58,736 units in the corresponding month last year, according to latest numbers released by FADA.

The two-wheeler category witnessed a growth of 15 per cent to 12,67,233 units during the month against 11,04,309 units in February 2022. Commercial vehicle retail sales grew 17 per cent to 79,027 units (67,391 units). The sharpest growth was posted by three-wheeler sales which increased 81 per cent to 72,994 units in February as against 40,224 units in the corresponding month last year.

“This category (three-wheeler) has seen a drastic growth due to Central and State government’s subsidy along with good scheme promotion done by States. Along with this, aggressive finance schemes continue to aid growth for this category,” Singhania said.

Bharat’s demand wanes

On the flipside, India’s chief economic advisor said that urban demand recovery is taking place at a faster pace then rural, which indicates that demand, especially for two-wheelers, may remain low in rural areas. This, along with a sharp slowdown in private consumption expenditure to a two-year low, suggests a softening in household spending demand amid inflationary pressure as post-Covid pent-up demand starts to fade, Singhania further said while sharing the monthly retail sales numbers.

“Apart from this, the Finance Ministry has released a statement that the predictions of a return of El Niño conditions in the Pacific could presage a weaker monsoon in India, resulting in lower output and higher prices. This will act as a dampener for auto sales,” he said.

Therefore, “while the month of March looks good for auto sales, on a medium-term outlook, FADA remains cautious till the time a better monsoon forecast is not announced by IMD,” he added.

Overall, February 2023 continued to witness double digit growth of 16 per cent to 17,75,424 units across categories against 15,31,196 units in last February.

“The domestic/exports industries are growing, we are seeing good traction in the auto industry. We are seeing new hiring also and there are no job cuts. The nature of the industry is changing post Covid, and we are seeing a lot of good talent being attracted in the industry,” Sunjay Kapur, President, ACMA, told b businessline.

According to Mitul Shah, Head of Research at Reliance Securities, Indian automobile companies witnessed gradual improvement in sales performance of YoY as well as MoM.

“Better Rabi sowing supported the tractor segment, while picking up in construction activities with new infra projects aided CV sales. Low base and normalized school and college activities fueled buses and three wheeler sales. Tractor sales performance was a big surprise as it recorded healthy double-digit YoY growth, despite slow rural recovery,” he added.

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