November 2022 clocked the highest sales in the history of the Indian automobile industry, though March 2020 was an exception when retails were higher due to BS4 to BS6 transition.
Data released by the Federation of Automobile Dealers Associations (FADA) noted that on a YoY basis, total vehicle retail for November 2022 saw a growth of 26%. All the categories posted positive growth as 2W, 3W, PV, Tractors, and CVs were up by 24%, 80%, 21%, 57%, and 33%, respectively.
Manish Raj Singhania, President, FADA, said, “Auto Retail in November ’22 saw an overall growth of 26%. The baton was passed by the positive run of festive sales to the Great Indian Wedding Season (from November 14 to December 14) where around 32 lakh weddings will be solemnised across the country.”
3Ws Post Highest Growth
The 3W segment posted the highest growth of 80.34% YoY in November 2022 and 4% when compared to 2019, a pre-COVID year. Notably, all the subcategories of the 3W posted positive growth.
“The category which was witnessing low demand during COVID has now emerged as the highest growing category due to positive sentiments and fear of lockdowns out of mind,” Singhania said.
Also, electrification in the category continues at its highest pace. As a result, the 3Ws continue to be the poster boy of India’s electric vehicle adoption.
PVs Grow 21.31%
India’s passenger vehicle sales, which had lately become a matter of concern, posted 21.31% YoY growth. A total of 300,922 PVs were sold in November 2022, against 248,052 units sold in November 2021.
Singhania explained, “Better availability of model mixes from past months, new launches and increase in rural demand continues to keep the segment in healthy condition. Compact SUV and SUV categories coupled with higher variant models continues to rule.”
However, compared with November 2020 PV sales, the figures declined by 1.78% YoY, as 306,385 PV units were sold in November 2020.
2Ws Back In Action
The entire Indian auto industry seems to have found relief in the increasing 2W sales figures. This segment posted 23.61% YoY growth in November 2022 to 1,847,708 2Ws against 1,494,797 in November 2021.
“This segment is slowly turning the tides from negative to positive as the same can be witnessed from retail sales due to the ongoing wedding season,” Singhania said.
As pointed out by FADA, healthy auto retailsare also supported by RBIs Consumer Confidence Data which remains on the recovery path on account of better perceptions of the general economic situation, employment, and household income.
CVs, Tractors Witness Growth
Against a total of 59,765 CVs sold in November 2021, 79,369 units were sold in November 2022, registering 32.80% YoY growth.
“With Government’s continued focus in the infrastructure space and new mining projects, replacement demand continued to pour in along with healthy inter-state passenger movement enabling bus sales,” Singhania said.
Tractor sales also grew 56.81% YoY to 77,993 units sold in November 2022 against 49,737 units in November 2021.
FADA believes RBI’s continued rate hike and China Lockdown may play spoilsport in the near term. However, most of the OEMs are announcing price hikes going forward. To counter this and for the lower end of the pyramid, OEMs have started announcing discounts for slow-moving products and lower variants and clearing their year-end stocks.
Notably, RBI yesterday increased the repo rate by 35 bps (225 bps increase since May 22) and continues to hint at more hikes in the future. This increase brings the repo rate to 6.25%, the highest since Feb 2019.
This will further lead to a higher cost of borrowings apart from the price hikes announced by OEMs and may dent consumer confidence, especially in the 2W and entry-level PV segments. Along with this, the China lockdown may play its part in slowing the supply of semiconductors.