Indian auto retails saw growth in April, increasing uncertainty for May, FADA warns

However, FADA president Manish Raj Singhania warned that May may see a decline in retail sales. Singhania asserted that the ongoing election uncertainty continues to affect market sentiment, delaying consumer conversions and halting purchase decisions. Additionally, financial constraints, extreme temperatures and overcapacity in commercial vehicles hampered growth, while widespread discounts in the passenger vehicle segment hampered profitability.

Seasonal factors such as limited wedding dates and fewer major festive events can also affect demand. Despite these challenges, Singhania highlighted several positive indicators shaping the outlook for May 2024. Enhanced vehicle supply and strategic planning in the two-wheeler segment led to increased customer bookings and improved market sentiment, supported by favorable agricultural yields.

Also Read: Indian auto industry poised for growth amid mix of optimism and challenge: FADA

In the passenger vehicle sector, upcoming model launches and promising monsoon forecasts are expected to boost consumer interest. Additionally, the pace is expected to further accelerate due to the introduction of new electric models and continued demand for conventional vehicles.

A strong start to FY25

As per the FADA report, a favorable trend has emerged across all vehicle segments in April 2024. Notably, the passenger vehicle (PV) category saw strong double-digit growth year-on-year, registering retail sales of 3,35,123 units. This represents a significant increase of about 16 percent compared to the same month of the previous year. This growth was fueled by improved model availability and positive market sentiments, especially during festive occasions like Navratri and Gudi Padwa.

However, despite strong bookings and customer engagement, challenges such as intense competition, surplus supply and heavy discounting posed obstacles to continued growth. Additionally, the absence of new models in certain portfolios affected market traction.

Meanwhile the two-wheeler segment experienced significant growth due to increased supply and increasing demand for 125cc models. Retail sales reached 16,43,510 units, reflecting a significant 33.21 percent increase over April 2023, the growth was driven by positive market sentiments, stable fuel prices, promising monsoon outlook, festive demand and wedding season. Additionally, new model launches contributed to the growth of the sector despite some supply delays.

Date of first publication: 08 May 2024, 4:40 PM IST