Festive season auto sales scale record high in 2023, up 19%, says FADA

Rural areas contributed to the surge in two-wheeler purchases: Fada president

Retail sales of automobiles during the festival season saw the highest ever numbers in 2023, scaling 3.793 million units, up 19 per cent over the 3.195 million units during the same period last financial year.

The 42-day festival period started on the first day of Navratri and ended 15 days after Dhanteras.

Significant growth was observed in the two-wheeler, three-wheeler, commercial vehicle, and passenger-vehicle segments, with a rise of 21 per cent, 41 per cent, 8 per cent, and 10 per cent, respectively. However, tractors saw a slight decline of 0.5 per cent, based on the data shared by the Federation of Automobile Dealers Associations (Fada).

“Record-breaking sales were reported in several categories, with rural areas particularly contributing to the surge in two-wheeler purchases. Despite initial underperformance during Navratri, particularly in the passenger-vehicle sector, the situation improved by Deepawali, ending with a 10 per cent growth rate,” said Manish Raj Singhania, president, Fada. 

“While sport utility vehicles (SUVs) had the highest demand, the inventory levels for passenger vehicles remain a significant concern as original equipment manufacturers continue to push further dispatches, thus keeping the inventory rate at near all-time high levels. Tractors, which saw an 8.3 per cent decrease in sales during Navratri, made a remarkable recovery, ending the festival period with the decrease going down to just 0.5 per cent. This turnaround highlights the robust purchasing power in rural India,” he said. 

Based on the Fada data, two-wheeler sales were seen up from 2.39 million last year to 2.89 million this year. Similarly, three-wheeler sales went up from 101,052 units last year to 142,875 units this year, and commercial vehicles from 114,498 units in 2022 to 123,784 in 2023. Passenger-vehicle sales went up to a record 547,246 from 496,047 units last year. “There is optimism among customers and original equipment manufacturers in India. This year, the rise in sales was mainly due to a natural and pentup demand. Hence, next year is going to be challenging and new model launches are also going to be relatively few,” said Puneet Gupta, auto analyst, S&P Automotive.

Rural demand and election boost

According to Fada, there has been a considerable rise in rural demand during the current festival season and in states where elections are happening.

“If you look at the states where elections have been held, two-wheeler sales have seen huge growth,” said Singhania.

Two-wheeler sales in Madhya Pradesh grew 28 per cent, in Rajasthan 24 per cent, in Chhattisgarh 20 per cent, and in Mizoram 41 per cent.

According to FADA numbers, inventory levels last month touched an all-time high of 63-66 days, as dispatches totalled around 390,000 units.

“Lots of original equipment manufacturers go for annual maintenance after Diwali. After festivals, we have seen a drop in stock levels. We expect inventories to be in the range 40-45 days. That is the requirement of the dealer community,” he said.

“It depends on whether the wholesale numbers are between 300,000 and 340,000 units,” he added.