India's passenger vehicle industry ended the financial year 2022-23 with the highest-ever sales but signs of growth tapering off were also visible, the auto dealers' association said today.
“As the high-growth period has now passed, FY24 is expected to see tapered growth in the low single digits due to a high base, inflationary pressures, routine price hikes, and regulatory changes,” the Federation of Automobile Dealers Associations, said in a release.
The sales of passenger vehicles jumped 23% to 36.20 lakh units in the year ended March.
“The previous high was in FY19 when retail sales were 3.2 million vehicles. The segment experienced numerous new launches and better product availability due to the easing of the semiconductor shortage during the year. The demand for higher-end variants helped sustain sales,” Manish Raj Singhania, president of FADA, said in a statement.
In March, all categories witnessed double-digit growth in sales except tractors, which grew only 3.8% as anticipation of crop damage due to unseasonal rains in March kept customers away.
This could spell trouble for the auto industry as U.S. government agencies have warned for the third consecutive month of the possibility of El Nino's arrival later this year, the association said.
Poor monsoons could hamper rural India's growth potential, which can have an impact on sales there, it added.
A large part of auto sales are in rural markets, which are yet to recover from the impact of rise in vehicle prices after the Covid-19 pandemic.
This impact is most visible in the two-wheeler segment. Although sales in the category have improved from multi-year lows of 2020-21 to 1.60 crore units, a growth of 18.5% compared with last year.
Auto Retail Sales In March (YoY)
Total sales rose 14% to 20.42 lakh units
Passenger vehicle sales rose 14.4% to 3.35 lakh units.
Two-wheeler sales grew 12.4% to 14.46 lakh units.
Sales of commercial vehicles rose 10.3% to 92,790 units.
Three-wheeler sales rose 69% to 86,857 units.
Sales of tractors grew 3.8% to 81,067 units.
However, the data showed that sales were still lower than the 1.67 crore units sold in 2016-17, let alone the record sales of 1.95 crore units in 2018-19.
Industry experts blame it on the steep rise in prices due to new emission norms and increased commodity costs, while the income levels of customers have not gone up in the same proportion.
A similar trend of muted demand can be seen in sales of entry-level cars, where growth has remained lower than the popular SUV category.
The entry-level variant remains under pressure as customers in this category are still affected by high inflation, according to FADA.
Auto Retail Sales In FY23
Total sales rose 21% to 2.22 crore units.
Passenger vehicle sales rose 23% to 36.20 lakh units.
Two-wheeler sales grew 18.5% to 1.60 crore units.
Sales of commercial vehicles jumped 33% to 9.40 lakh units.
Three-wheeler sales rose 84% to 7.67 lakh units.
Sales of tractors grew 8% to 8.27 lakh units.
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