Auto Sales in May Surge 10%; 2-Wheeler Sales Slump

The Federation of Automobile Dealers Associations (FADA) announced Vehicle Retail Data for May 2023 today. As per the data, the performance of the auto retail industry was good.

Commenting on May's auto sales performance, the FADA President - Mr Manish Raj said that May has been an encouraging month for the auto retail industry, it demonstrated a robust 10 per cent year-on-year growth across all the vehicle categories.

We have witnessed a resurgence in the 2-wheeler, 3-wheeler, photovoltaic (PV), and tractor segments with growth rates of 9 per cent, 79 per cent, 4 per cent, and 10 per cent respectively. Though there has been a slight drop of 2 per cent growth compared to the pre-Covid levels, the overall retail data have shown improvement. The 2-wheeler sales did continue to face some challenges, as it recorded a high single-digit setback of -8 per cent.

The auto retail sector is facing diverse challenges across different segments. In the case of the 2-wheeler sector, seasonal factors could bolster demand. But the concerns like weather-induced walk-in reductions, regulatory norms, and inventory issues do persist.

The PV sector is expecting improved demand, particularly for the new models, compact and full-sized SUVs and EVs but the inventory pressure and right model availability could pose a challenge.

Mr. Raj further added, that the Electric Vehicles (EVs) made impressive strides this month, contributing to 8 per cent of the total vehicle retail. This was buoyed by a surge in 2-wheeler electronic vehicle sales that contributed 7 per cent and 3-wheeler electric vehicles sales contributing a substantial 56% of their respective total sales. The commercial vehicles and PV categories also marked their presence in the electronic vehicles landscape, with respective contributions of 0.5% and 2.5 per cent.

For the near-term outlook, FADA advocates for a balanced auto retail ecosystem, urging collective action to regulate inventory levels as it negotiates lower interest rates and supports 2-wheeler dealers by eliminating illegal MBO sales. While acknowledging near-term challenges, FADA maintains a stance of cautious optimism, highlighting the potential for growth through collaborative efforts and alignment with market trends.