In the fast lane: Retail car sales hit a record in Jan on wedding demand

January 2024 marked a record-breaking month for the passenger vehicle (PV) segment, with retail sales touching 393,250 units. This is a 13 per cent rise from 347,086 units in January 2023, surpassing the previous record set in November 2023, according to Federation of Automobile Dealers Associations (FADA) data.

The strong performance was supported by SUV demand, introduction of new models, greater availability, effective marketing, consumer schemes and the wedding season.

However, concerns persist regarding PV inventory levels, which are now within the 50-55 day range. 

Retail automobiles sales during the month saw a 15 per cent increase to 2.13 million units, compared to 1.85 million units during the corresponding period in 2023, owing to recovery in the rural market and marriage season.

This growth was observed across all vehicle categories, including two-wheelers, three-wheelers, PVs, tractors and commercial vehicles, which reported increases of 15 per cent, 37 per cent, 13 per cent, 21 per cent, and 0.1 per cent, respectively.

At present, there is a huge carry forward stock of around 23 models. Companies which have higher inventory include Maruti Suzuki, Hyundai Motor, Tata Motors, M&M and Kia.

“There is a need for immediate recalibration of production from original equipment manufacturers (OEMs) to better align with actual market demand and prevent future oversupply issues. In this dynamic industry, adaptability is crucial. OEMs must balance innovation with strategic production planning to ensure sustained success and overall market stability,” said Manish Raj Singhania, president of FADA.

The two-wheeler market began the year positively, with improved vehicle availability, following adjustments post-Onboard Diagnostic 2 (OBD 2) norms’ implementation. The introduction of new models and a shift towards premium options also contributed to increased demand. This, coupled with a good harvest, a positive marriage season, and effective follow-ups and offers, suggests a favourable outlook for the two-wheeler sector. Two-wheeler sales in January touched 1.46 million units, up from 1.27 million units in the same month of the previous year.

“Rural market is back and the marriage season, too, helped the numbers. Recovery in the rural market is not a one-month phenomenon. We have been seeing it for the last five months. With Lok Sabha elections coming, this will increase, especially in two-wheelers,” he said.

“The three-wheeler sector presented a mixed picture. While growth and optimism persist in the commercial three-wheeler market, the high competition from electric models highlights a significant market shift, now with 55 per cent electrification,” he added.

The segment experienced a 37 per cent increase to 97,675 units, up from 71,325 units in January 2023. He added that the share of electric vehicles in three wheelers may soon touch 65 per cent, owing to a demand rise, EV policies by states and removal of permits, among others.  

January also depicted a complex scenario for the commercial vehicle (CV) segment, showing limited year-on-year (Y-o-Y) growth.

“On one hand, increased infrastructure development, port activity, and positive crop yields boosted certain market segments. However, this momentum was offset by extreme weather conditions, tightened liquidity, high vehicle cost, and more restricted financing options,” Singhania said.

Retail sales in the CV sector were 89,208 units during the month, slightly up from 89,106 units in the previous year.