After 21% development in FY23, auto gross sales to hit gradual lane in FY24: FADA

• FY23 was the primary full yr that noticed no Covid influence within the final two years, and auto gross sales grew in double digits.
• It will be robust for the auto sector to copy FY23 gross sales development in FY24 as a result of many elements, says FADA.
• The 2W phase gross sales fell to a seven-year low in FY23 with complete retails of 15.9 million.
• Whereas passenger autos gross sales hit a report excessive in FY23, inquiries are slowing down.

After March clocked in a 14% year-on-year development in general automobile gross sales, auto gross sales for FY23 registered a formidable double digit development, as per knowledge by Federation of Car Sellers Associations (FADA).

FY23 was the primary full yr that noticed no Covid influence within the final two years, and general auto gross sales grew by 21%. All segments except tractors exhibited double digit development.

Two-wheelers, three-wheelers, passenger autos, and business autos grew at 19%, 84%, 23%, and 33% respectively, whereas tractors grew at 8% for FY23.

Regardless of the spectacular year-on-year development, the 2W phase gross sales fell to a seven-year low with complete retails of 15.9 million through the yr. EV penetration on this class through the yr was at 4.5%.

The three-wheeler class maintained its spectacular development fee of 84%, and electrification on this class reached 52%, pushed by strong e-rickshaw gross sales. “The supply of finance, together with the supply of other fuels and state subsidies, has contributed to the expansion of this phase,” stated Manish Raj Singhania, president, FADA.

Passenger autos exhibited spectacular development with retail gross sales hitting a report excessive of three.9 million in FY23, crossing the earlier excessive seen in FY19 at 3.2 million.

“The phase skilled quite a few new launches and higher product availability because of the easing of the semiconductor scarcity through the yr. The demand for higher-end variants helped maintain gross sales. Nevertheless, the entry-level variant stays underneath stress as clients on this class are nonetheless affected by excessive inflation,” stated Singhania.

‘FY24 to be a yr of consolidation’

The spectacular gross sales seen in FY23 may nonetheless not stick with it to the brand new monetary yr, the trade physique says. The fiscal yr 2024 is anticipated to witness a average development fee within the low single digits. This may be attributed to a excessive base, inflationary pressures, routine value hikes, and regulatory modifications.

“Moreover, the yr will see excessive penetration of electrical autos (EVs), which can eat into the market share of inside combustion engine (ICE) autos. FY24 is predicted to be a yr of consolidation for the Indian auto retail trade, with an general single-digit development in comparison with the earlier yr,” FADA stated.

India’s auto gross sales may also need to climate many storms this yr, actually and figuratively. “US Authorities companies have warned for the third consecutive month about the potential of El Niño’s arrival later within the yr, which might result in poor monsoons and adversely have an effect on rural India’s development potential,” stated FADA.

The latest premature rains and hailstorms in North and Central India have destroyed essential rabi crops and delayed harvesting, negatively impacting rural gross sales. Even in FY23, two-wheeler and tractor gross sales figures present that there was stress in rural gross sales.

Rural development struggles in March too

Whilst of March, there’s little indication that gross sales from rural areas have been bettering. Excessive inflation has hit rural gross sales arduous across the similar time final yr.

Two wheeler gross sales are but to achieve pre-pandemic ranges, despite exhibiting a year-on-year development of 12% in March. As in comparison with pre-Covid ranges, they’re nonetheless down by 9%.

The retail gross sales of the 3-wheeler phase for March reached an all-time excessive by growing by 69% and exceeding the earlier peak gross sales in March 2020. This month marked the trade’s transition from BS-4 to BS-6.

The passenger automobile class skilled a year-on-year development of 14%, because of improved provides and elevated gross sales, notably on the greater finish of the value vary.

Moreover, the rise in costs of OBD2A autos and a number of festivals within the month contributed to wholesome gross sales of PVs. Though gross sales stay sturdy, the extent of inquiries has began to say no.

Ranging from April 2023, all passenger autos shall be required to put in an onboard diagnostics system known as OBD-2 to assist repeatedly monitor the automobile’s emission ranges real-time.

Supply: FADA