Automobile retail sales in India post 16 pc growth in February: FADA

Automobile retail sales in India witnessed double-digit growth of 16 per cent in February, the Federation of Automobile Dealers Associations (FADA) said on Monday.

All categories also witnessed double-digit growth with 2-wheeler, 3-wheeler, passenger vehicle, tractor and commercial vehicles growing by 15 per cent, 81 per cent, 11 per cent, 14 per cent and 17 per cent, respectively, on year-on-year basis, according to the FADA statement released on Monday.

FADA President, Manish Raj Singhania said, "February'23 (2023) continued to witness double-digit growth of 16 per cent YoY but was still down by (-8) per cent, when compared to pre-Covid month of February'20 (2020)."

The two-wheeler (2W) category witnessed a growth of 15 per cent YoY but was down by (-14) per cent when compared to pre-Covid month of February 2020. The change in OBD norms which comes into effect from April along with marriage season kept the sales ticking, FADA Manish Raj Singhania said on Monday.

From April 2023, every passenger vehicle will be mandated to fit an onboard diagnostics device called OBD-2. This device will monitor the emission levels in real time, and the vehicle will have to comply with the emission levels in the real world, as opposed to complying in an idyllic setting in a laboratory.

Overall, high inflation and poor sentiment have kept the customers at bay, according to the president of FADA. The three-wheeler (3W) segment has seen 81 per cent growth YoY and has also grown by 3 per cent when compared to the pre-Covid month of February'20.

"This category has seen a drastic growth due to the Central and the state governments' subsidy along with good scheme promotion done by the states," the president said, adding, "Along with this, aggressive finance schemes continue to aid growth for this category."

The passenger vehicle segment saw a growth of 11 per cent YoY and 16 per cent when compared to pre-Covid month of February 2020. Launch of new models, continuously improving supply coupled with a healthy booking-to-cancellation ratio and wedding bells kept the momentum going for this already well-to-do segment, President Singhania said.

The commercial vehicle category has also shown robust growth by growing 17 per cent YoY though it fell by (-10) per cent when compared to pre-Covid month of February'20, according to the president. He also said walk-in enquiries improved during the month.

Apart from this, demand has also increased due to the change in OBD norms which will see price hikes. On the Government's side, infrastructure spending has been healthy. This is also aiding better sales."

The March has multiple festivals like Holi, Ugadi, Gudi Padwa, Navratri, etc, so the sectoral body said this will help push auto sales. Apart from this, better availability of vehicles, last month of the Financial Year, change in OBD norms from April which will increase vehicle prices, the industry may see schemes being rolled out by the original equipment manufacturers (OEMs) thus aiding higher sales, according to FADA.

On the flipside, India's chief economic advisor said that urban demand recovery is taking place at a faster pace then rural. This along with sharp slowdown in private consumption expenditure to a 2-year low suggests a softening in household spending demand amid inflationary pressure as post Covid pent-up demand starts to fade.

"Apart from this, the finance ministry has released a statement that the predictions of a return of El Nino conditions in the Pacific could presage a weaker monsoon in India, resulting in lower output and higher prices. This will act as a dampener for auto sales," FADA said.

While March looks good for auto sales, on a medium-term outlook, FADA said it remains cautious till the time a better monsoon forecast is not announced by India Meteorological Department (IMD).

( With inputs from ANI )