Weddings and two other factors pushing car sales forward in India

The passenger vehicle segment in the Indian automotive market continued with its upward surge in the month of February, as per data shared by Federation of Automobile Dealers Associations (FADA) on Monday morning. The sales of cars last month was up by 11 per cent vis-a-vis February of 2022 and an even more impressive 16 per cent when compared to the pre-pandemic month of February of 2020.

FADA continues to point to several positive factors that are propelling car sales in the country. Of these, the wedding season is one that is specifically pointed out where new purchases tend to be more frequent. But the more significant factors also are the continuation of new model launches that create an uptick in customer interest, often also translating into purchases and sales.

Another big factor helping car manufacturers is the gradual and continued easing of supply-chain-related issues. In the past, there has been a shortage of crucial components but the situation - although still far from perfect - has been improving. Most manufacturers report a healthy booking order and FADA notes that a healthy booking to cancellation ratio should auger well for the market at large.

But this in no way means the path forward is free from any challenges. FADA notes that the demand from the rural market has not yet fully recovered and that inflationary pressures could pose a risk to buying sentiments. It also leans on forecasts of El Nino returning as early as June to have an impact on monsoon in the country which, in turn, could potentially affect vehicle sales across categories and segments.