Auto sales up 14% in Jan, helped by festive season, rural demand: FADA

Automobile sales grew 14 per cent in January year-on -year as festivals, weddings and more money in the rural economy helped demand, said an industry association on Monday.

All categories of vehicles did well with two-wheeler, three-wheeler, passenger vehicle, tractor and commercial vehicles growing 10 per cent, 59 per cent, 22 per cent, 8 per cent and 16 per cent respectively, said the Federation of Automobile Dealers Associations (FADA).

“Overall, the demand was up, especially in the passenger car segment, the order book has been continuously growing. We have a decent order book available with passenger cars, which is why the overall health of the auto industry has been good,” said Manish Raj Singhania, FADA’s president.

Farmers getting a decent price for their products also pushed the growth during the month. “It is very important that for complete India to move forward, rural demand should also progress simultaneously,” he added.

However, January 2023 retail sales were down 8 per cent compared to the pre-pandemic time of January 2020. FADA said the two-wheeler sales are better than a year ago, but the rural market is yet to revive fully as the cost of ownership has shot up while disposable income has not.

The three-wheeler segment grew 60 per cent year-on-year. It posted 101 per cent growth compared to 2021 and is down by mere 3 per cent when compared to pre-pandemic levels in January 2020.

The passenger vehicle (PV) segment continues to perform well with growth of 22 per cent year-on-year, 10 per cent from January 2021 and 8 per cent from January 2020. Healthy bookings and improved supplies are helping PV sales, but the entry-level sub-segment is still feeling the pinch. While the waiting period for some models has come down, for compact SUVs, SUVs and luxury vehicles continues to be two to three months.

Maruti Suzuki maintained its leadership position in passenger vehicle sales, earning 44 per cent market share in January. It was followed by Hyundai Motor and Tata Motors, which each had 13 per cent share.

The commercial vehicle (CV) segment grew 16 per cent compared to last year, 23 per cent from January 2021and 6 per cent from January 2020. “Continued demand in the market due to replacement of fleet, growth in freight availability and government’s consistent push for infrastructure projects has helped the CV segment rise above pre-covid numbers,” FADA said.

The association expressed hope that announcements in Budget 2023-24 will help the industry. Demand of entry level two-wheelers and entry-level passenger vehicles is likely to accelerate due to Income Tax rebate, allocation for vehicle scrapping policy and import duty exemption for manufacturing lithium batteries to reduce elective vehicle acquisition cost.

A reduction in surcharge at the highest Income Tax slab will also benefit high end vehicle sales. Apart from this, a capital outlay of Rs 10 trillion for Infrastructure spending will help aid CV sales, it said.