Federation of Automobile Dealers Associations Releases April’23 Vehicle Retail Data

Highlighs

FY'24 Kicks-off with Modest Vehicle Retail Performance in April. 

April sees a 4% decline in total vehicle retails, signalling a slow start to FY'24. 

Healthy YoY growth of 57% observed in 3-wheelers, while Tractor and CV experience marginal growth of 1% and 2%, respectively. 

2-wheelers and passenger vehicles face a setback, declining by 7% and 1% respectively. 

For the first time in eight months, passenger vehicles witness a YoY degrowth. 

Entry-level 2-wheeler segment continues to struggle, down by 19% compared to pre-COVID April 2019, contributing to a 12% decline in total vehicle retails. 

FADA urges GST Council to consider a GST rate reduction from 28% to 18% for 2-wheelers to help revive the struggling segment. 

OBD 2A norms lead to vehicle price increases, prompting advanced purchases in March. 

Unfavourable weather conditions in April, including untimely rains and hailstorms, cause crop damage in several states, exacerbating farmer concerns and potentially impacting entry-level 2-wheeler and passenger car sales. 

The Federation of Automobile Dealers Associations (FADA) released Vehicle Retail Data for April’23.  

Commenting on April 2023's performance, FADA President Mr. Manish Raj Singhania stated, "Financial Year 2024 began on a subdued note, with the month of April experiencing a 4% YoY overall decline. Although the 3-wheeler segment enjoyed robust growth of 57% YoY, Tractor and CV segments only grew by a modest 1% and 2%, respectively. Meanwhile, the 2-wheeler and Passenger Vehicle categories experienced YoY degrowth of 7% and 1%, respectively. 

The 2-wheeler segment's continued low sales, with a 7% YoY decrease, can be attributed to limited supplies due to the OBD 2A shift, untimely rains, and pre-buying in March. Model mix availability, rural sentiment, and demand in the 2-wheeler motorcycle segment remain weak. The rural economy has yet to show significant progress. Compared to the pre-COVID April 2019, 2-wheeler sales are still down by 19%. 

Thanks to high demand in the e-rickshaw and passenger segments, the 3-wheeler segment has grown by 57% YoY and also surpassing pre-COVID levels at an healthy rate. 

The Passenger Vehicle segment, which achieved record sales in FY23, slowed down in April, with retails decreasing by 1% YoY. This was primarily due to last year's high base and the OBD 2A norms, which led to vehicle price increases and advanced purchases in March. Although supplies are improving, there is a significant mismatch between customer demand and available inventory. Furthermore, entry-level PVs have fewer buyers, suggesting that customers at the bottom of the pyramid are still hesitant to upgrade from 2-wheelers to 4-wheelers. For the first time in eight months, the PV segment witnessed a YoY degrowth, potentially signalling a tapering demand in this segment. 

The CV segment maintained positive momentum with a 2% YoY increase in retail sales. However, dealers reported that vehicle availability was a major concern due to the OBD 2A norms. The low base from last year also contributed to the positive growth." 

Near Term Outlook 

The 2-wheeler segment continues to face challenges, with entry-level vehicles attracting fewer buyers. FADA urges the GST Council to consider reducing GST on 2-wheelers from 28% to 18% to help revive this vital segment, which represents 75% of total auto sales volume. On the other hand, the upcoming marriage season in May is expected to bring about a sales resurgence, driven by an increase in customer inquiries. Additionally, as electric vehicles (EVs) gain popularity, customers are increasingly considering transitioning from internal combustion engines (ICE) to EVs, which may temporarily delay purchasing decisions. 

The Commercial Vehicle (CV) segment is witnessing strong demand in the M&HCV segment, supported by robust infrastructure projects taking place nationwide. Improved product supply from OEMs and customer adaptation to price shifts contribute to the segment's growth. 

In the Passenger Vehicle (PV) segment, rising inventory levels are raising concerns. FADA urges OEMs to recalibrate their inventory and prioritize the production and supply of products that are in high demand, ensuring a more efficient alignment between market demand and available inventory. This will ultimately benefit both customers and manufacturers. Despite the ongoing chip shortages and somewhat sluggish market conditions, the marriage season in May is expected to provide a slight boost in sales for the current month. 

Unfavourable weather conditions persist in May, including untimely rains and hailstorms, causing crop damage in multiple states. This exacerbates concerns for farmers and may potentially impact entry-level 2-wheeler and passenger car sales. 

Considering these factors, FADA maintains a cautious stance for the month of May. 

Key Findings from our Online Members Survey 

Inventory at the end of April’23 

Average inventory for Passenger Vehicles ranges from 37-39 days 39-41  

Average inventory for Two – Wheelers ranges from 15-20 days 12-15 

Liquidity 

Neutral              47.39% 

Good                 33.73% 

Bad                      18.88% 

Sentiment 

Neutral              43.37% 

Good                   34.14% 

Bad                      22.49%