Indian Auto retails saw growth in April, uncertainty looms for May, warns FADA

Despite continuous growth in the Indian automotive market, the Federation of Automobile Dealers Associations (FADA) have sounded alarm for the future. The industry body reported total vehicle retail sales in India rose 27 per cent year-on-year to 22,06,070 units in April as all segments, including passenger vehicles and two-wheelers, witnessed growth.

However, Manish Raj Singhania, President, FADA, cautioned that May could see a downfall in retails. Singhania emphasised that ongoing election uncertainty continues to impact market sentiment, leading to delayed customer conversions and stalled purchasing decisions. Additionally, financial constraints, extreme temperatures and commercial vehicle overcapacity may hinder growth, while extensive discounts in the passenger vehicle segment might hamper profitability.

Seasonal factors like limited wedding dates and fewer major festive events could 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 have spurred increased customer bookings and improved market sentiment, supported by favourable agricultural yields.

In the passenger vehicle sector, upcoming model launches and promising monsoon forecasts are expected to drive customer interest. Moreover, the introduction of new electric models and sustained demand for traditional vehicles are anticipated to further propel momentum.

Strong start for FY25

According to the FADA report, a favourable trend has emerged across all vehicle segments in April 2024. Notably, the passenger vehicle (PV) category witnessed a robust double-digit year-on-year growth, registering retail sales of 3,35,123 units, marking a substantial increase of nearly 16 per cent compared to the same month previous year. This growth was fueled by improved model availability and positive market sentiments, particularly during festive occasions such as Navratri and Gudi Padwa.

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

The two-wheeler segment meanwhile, experienced significant growth driven by enhanced supply and escalating demand for 125cc models. With retail sales reaching 16,43,510 units, reflecting a notable 33.21 per cent surge compared to April 2023, this growth was propelled by positive market sentiments, stable fuel prices, a promising monsoon outlook, festive demand, and the wedding season. Additionally, new model launches contributed to the sector's growth, despite some supply delays.