India's automobile retail sales witnessed an 8% dip in October, but Navratri boosted the sector

In a mixed bag for the Indian automobile sector, the latest data from the Federation of Automobile Dealers Associations (FADA) reveals that the country's automobile retail sales for October 2023 have experienced an 8% decline compared to the same period last year. This dip can be primarily attributed to a significant drop in sales of two-wheelers (2W) and passenger vehicles (PV) by 13% and 1.4%, respectively.

However, the festive period of Navratri, which spanned from October 15th to 24th, brought cheer to the sector as it marked record-breaking sales, posting an impressive 18 % increase year-over-year (Y-O-Y).

Throughout the month, the total sales tally stood at 2.117 million units, compared to 2.295 million units during October 2022, showcasing the impact of these fluctuations in the Indian automobile retail landscape. Interestingly, while two-wheelers and passenger vehicles experienced a slump, three-wheelers (3W) saw a remarkable 46% rise in sales, commercial vehicles showed a 10.3% increase, and tractors recorded a 6.2% growth during this period.

Manish Raj Singhania, the President of FADA, explained the challenging context by stating that the month had commenced under the shadow of the inauspicious Shraddh period, which persisted until October 14. He further mentioned that as a result, a year-on-year comparison might not accurately reflect the actual trajectory of growth in the Indian auto retail sector. Singhania also stated that when viewed on a month-on-month basis, the auto retail sector thrived with a 13% increase, driven by contributions from all categories. Two-wheelers, three-wheelers, passenger vehicles, tractors, and commercial vehicles expanded by 15%, 2%, 7%, 15%, and 10%, respectively, underscoring the sector's robust growth momentum.

The highlight of Navratri 2023 was the remarkable 18% increase in retail sales, surpassing the figures recorded during Navratri 2017. With the exception of tractors, which witnessed an 8% decline, all categories exhibited commendable growth. Two-wheelers, three-wheelers, commercial vehicles, and passenger vehicles experienced substantial increases of 22%, 43%, 9%, and 7%, respectively.

Singhania attributed the positive trends in the two-wheeler category during Navratri and October to festive cheer, stronger rural demand, enhanced model availability, and improved financial schemes. He also noted that states going into elections injected optimism into the market, leading to increased government spending and improved liquidity. He stated that despite a shift in festival dates, with Diwali moving to November, the anticipation of the festive season had stimulated purchase intent. He also mentioned that dealers had reported good stock preparation and robust ground efforts, which had led to an uptick in sales figures, showcasing a resilient and adaptive market. 

In the two-wheeler segment, market leaders such as Hero Motocorp, Honda Motorcycle, and TVS Motor saw their sales decline by 26%, 10%, and 5.4%, respectively, compared to October in the previous financial year. Meanwhile, three-wheelers achieved a milestone by crossing the 100,000 mark for the first time in October, with 104,711 units sold, compared to 102,426 in September.

In the passenger vehicle segment, sales of major players like Maruti Suzuki India, Hyundai Motor India, and Tata Motors dipped by 3%, 2%, and 3%, respectively, during the period under review. Singhania remains cautiously optimistic, stating, "Festivities along with the harvest season, especially paddy, are expected to boost 2W sales, with optimism fueled by new schemes and a push towards electrification, despite supply concerns. Commercial vehicles are looking forward to a strong November, with festive and construction activities enhancing demand alongside anticipated financial schemes. Nevertheless, the PV segment is currently maneuvering through a challenging period. While the holiday season may lead to a surge in bookings, the imminent year-end discounts cast a shadow over immediate sales.”

The Indian automobile retail sector is proving its resilience and adaptability in the face of various challenges, and industry experts will be closely monitoring the impact of upcoming festivals and economic factors in the coming months.