Auto retail sales rise 7% in Jan; PV segment up 16%: FADA

New Delhi: Automobile retail sales in India rose 7 per cent year-on-year in January at 22,91,621 units, driven by robust demand across segments, dealer's body FADA said on Thursday.

Overall retail sales stood at 21,49,117 units in January 2024.

"Our observations indicate that each vehicle category --2W, 3W, PV, tractor and CV-- witnessed positive momentum, pointing toward sustained consumer confidence and steady market recovery," the Federation of Automobile Dealers Associations (FADA) President C S Vigneshwar said in a statement.

Passenger vehicle retail sales jumped 16 per cent year-on-year to 4,65,920 units last month.

Many dealers noted improved demand but also pointed to last year's heavy discounting, which helped clear older models and shift registrations, Vigneshwar said.

Inventory levels have improved, dropping by around five days to 50-55 days, suggesting improved supply-demand balance, he added.

Two-wheeler retails stood at 15,25,862 units last month, an increase of 4 per cent, as compared with 14,65,039 units in same month last year.

Sales in urban areas outpaced rural on a Y-o-Y basis, growing by 5 per cent compared to 4 per cent.

Dealers cite new model launches, marriage season demand and improved financing as key growth drivers, Vigneshwar stated.

However, concerns about rising interest rates, rural liquidity challenges and market uncertainty still linger, he added.

Commercial vehicle sales rose 8 per cent year-on-year in January to 99,425 unitS.

While higher freight rates and passenger carrier demand provided a boost, many dealers cited low cash flow, strict financing policies and sluggish industries (like cement and coal) as major hurdles, Vigneshwars said.

Tractor sales rose 5 per cent year-on-year to 93,381 units in January while three-wheeler retail sales rose 7 per cent to 1,07,033 units last month.

FADA noted that riding on the momentum of a promising start to 2025, the auto retail sector enters February with cautious optimism.

According to a latest survey, nearly half of dealers (46 per cent) anticipate growth this month, while 43 per cent expect sales to stay flat and 11 per cent foresee a dip, the industry body said.

This blend of sentiments underscores the industry's complex landscape, where bright spots are tempered by ongoing challenges, it stated.

On the positive side, dealers report that the continuing marriage season, fresh product launches and strategic promotional activities are likely to sustain customer footfalls, it noted.

Furthermore, improved inventory management, better financing options from select lenders and backlogged orders in certain segments add to the sense of guarded confidence, it added.

With supportive policies and a post-budget lift in consumer sentiment, many believe February could see a stable or slightly elevated sales curve, FADA said.

At the same time, shorter working days, pockets of weak rural liquidity and inflationary pressures remain areas of concern, potentially limiting the extent of any upswing, it said.

Strict lending criteria, costlier vehicles and subdued demand in certain industrial sectors could weigh on overall performance, FADA noted.