- Along with weddings, the ongoing festive season has helped get customers into showrooms as on the date, FADA said in its latest report.
- The retailers association attributes the good growth in the three-wheeler segment to positive sentiment, fears that lockdowns will ease and the high level of electrification that the sector is experiencing.
- Going forward, interest rate hikes and price hikes by automakers could prove a bummer, according to the FADA, which remains cautiously optimistic in the near term.
The Great Indian Wedding season is boosting auto sales across all categories, the Federation of Automobile Dealers Associations (FADA) said Friday, adding that in November 2022, except March 2020, the auto industry achieved its best ever sales. to more fuel-efficient vehicles according to government regulations led to high sales.
Automotive retail sales for November 2022 were up 26% year-on-year with all categories be it two-wheelers, three-wheelers, passenger cars, tractors and commercial vehicles showing positive growth.
“The baton was passed by the positive run of festive sales to the Great Indian Wedding Season (from November 14 to December 14) where about 32 lakh weddings will be performed across the country,” FADA said in a press release.
In India, it is customary for the father of the bride to present a car or two-wheeler as a gift to the groom. Even in April and May of this year, car sales rose, especially in the two-wheeler segment, attributed to the rush wedding season by subject matter expertsin addition to the low base effect of the pandemic year.
Consumer confidence has also picked up, leading to better sales. “The latest consumer confidence data from the RBI suggests that consumer resilience is recovering on the back of better perceptions of the general economic situation, employment and household income. This, along with the ongoing festive season, has still helped to get customers to the showrooms as on the date,” said FADA.
Vehicle retail data for November 2022
|Category||November 2022||Growth over November 2021)||Growth over November 2020||Growth over November 2019 (pre-Covid month)|
E-rickshaws boost sales of tricycles
The three-wheeler category, which includes e-rickshaws and e-rickshaws with a trolley, as well as auto rickshaws for passengers, goods and people, is also showing phenomenal growth. The retailers association attributes this to the positive sentiment, the fear that the lockdowns will ease and the high level of electrification that the sector is experiencing. Sales of passenger e-rickshaws grew by a whopping 112.88% in November 2021, while sales of cart e-rickshaws increased by 75%.
Tractor sales have also been good this month as winter crop sowing begins. “For Bharat, farmers normally get their hands on money after the start of the harvest and this starts the spending cycle. We expect spending on car sales to increase once the crop hits the market and farmers get money in their hands,” the release said. In addition to tractors, many two-wheeler sales rely on rural recovery.
Speed breakers ahead
Despite good momentum across all categories, there could be many speed breakers ahead for the industry. Recently, the Reserve Bank of India announced its fifth rate hike which will drive up the financing cost of vehicle ownership as many of them rely on vehicle financing. The latest rate increase now brings the repo rate to 6.25%.
“This will further lead to higher borrowing costs apart from the price hikes by OEMs (original equipment manufacturers) and may erode consumer confidence, especially in the entry-level 2W and PV segment,” said FADA.
Auto companies have also announced price increases to offset the costs of high input prices. Maruti Suzuki was the first to announce a price increase from January next year, adding that price increases will vary by model. Luxury car maker Audi also said it will raise car prices by up to 1.7% from January. A That’s what the PTI report said Tata Motors is considering a price increase for passenger cars from next month.
“In addition, the lockdown in China may play a role in slowing semiconductor supplies. If this happens, it could act as a speed breaker and contribute to the mismatch between supply and demand, which has been improving since (the) last few months,” said the FADA, which remains cautiously optimistic in the near term.
Rate increase to affect demand for mid- and affordable housing, experts say
End of Revenge Spending? Urban spending will decline in the coming quarters, says Motilal Oswal