Auto Retail grows 10.14% yoy in May 2023

In what is a heartwarming indication ahead of the monsoon season and the subsequent festival period, auto-retail has grown by 10.14% during May 2023 compared with May 2022 according to data shared by Federation of Automobile Dealers Association (FADA). While 2W grew 9.32%, 3W grew a stunning 78.57% over last year during May 2023.

This is possibly due to the increased confidence of 3W owners and drivers of a realisting post-pandemic world, as compared with last year, when things were still settling down. Passenger vehicles, after showing monstrous growth all these months, settled with 4% growth over last year. Impending fees for schools and colleges would be among the top reasons for consumers to defer purchase plans for larger vehicles, especially the entry and mid-level level hatchbacks.

Manish Raj Singhania, President FADA stated, “May has been an encouraging month for the auto retail industry, demonstrating a robust 10% YoY growth across all vehicle categories. We have witnessed a resurgence in the 2W, 3W, PV, Tractor, and CV segments with growth rates of 9%, 79%, 4%, 10%, and 7% respectively. While there has been a slight -2% decline compared to pre-COVID levels, the overall retail figures have shown improvement. The 2W and CV sales did continue to face some challenges, recording high single digit setback of -8% and -7% respectively.”

Electric Vehicles (EVs) contributed to 8% of the total vehicle retail during May 2023. This was led by a surge in 2W EV sales that contributed 7% and 3W EV sales contributing a substantial 56% of their respective total sales. Passenger EVs contributed 2.5% of total sales, indicating a rising opportunity in the category. 

However, with reduction in FAME subsudies offered by the Government to EV manufacturers from 1 June 2023, sales of EVs could get impacted in the short-term, as consumers would have to pay 10-12% additionally than before. However, this situation could change ahead of the largest festival season in Q3 this year. 

“As we move forward, we remain committed to our customers and will continue to navigate these dynamic times, providing them with the best products and services that cater to their ever evolving needs and preferences“, added Singhania. 

FADA advocates for a balanced auto retail ecosystem, urging collective action to regulate inventory levels, negotiate lower interest rates and support 2W Dealers by eliminating illegal MBO sales. While acknowledging near-term challenges, FADA maintains a stance of cautious optimism, highlighting the potential for growth through collaborative efforts and alignment with market trends.

For several years now, the sale of automobiles has had a profound impact as well as a notable outcome on the status od the economy. While Tractor sales have remained stable, it is also an important indication of the agricultural sector, which is considered the backbone of the economy. Similarly is the sale of commercial vehicles, which transport goods across the length and breadth of the country.

For now, the picture looks promising for the next two quarters, even as the country and the automobile sector have passed through a severe rout between 2020-2022 on the back of the pandemic.