According to the Federation of Automobile Dealers Associations (FADA), car retail sales broke records in November, with 28.54 lakh vehicles sold, exceeding the previous high of 25.69 lakh units in March 2020, when automakers moved from BS-4 to BS-6 emission standards.

“November’23 has become a historic month for the Indian Auto Retail Industry as during the month, 28.54 lakh vehicles were sold, thus overtaking the previous highs of March’20 when the industry sold 25.69 lakh vehicles during the BS-4 to BS-6 transition,” said Manish Raj Singhania, president of the Indian Automobile Dealers.

Passenger cars and two-wheelers achieved unprecedented performance. PV sales increased 17.19% year on year to exceed the 3.6 lakh milestone in November, surpassing the 3.57 lakh cars sales in October 2022.

“November 2023 witnessed a strong surge in the PV category, primarily fuelled by Deepawali and the launch of new and appealing models. The improved supply chains, coupled with new launches, effectively catered to the festive demand, marking the peak point in sales,” adds FADA president.

Singhania, on the other hand, claims that the period after the celebrations saw a marked slowdown, along with the crucial difficulty of slow-moving inventory due to a mismatch in demand and supply that has yet to be rectified. “This issue casts a shadow over the otherwise positive trends, highlighting the need for strategic adjustments in inventory management,” he explains.

PV stockpile has decreased marginally but remains over 60 days. FADA asks automakers to limit the number of slow-moving vehicles in the entry-level segment and to propose attractive schemes to encourage year-end buying and assist reduce inventory at dealerships.

Severe rains and hailstorms might lead to higher inflation reducing car sales

In November, two-wheeler sales increased 21.08% year on year to 22.47 lakh units. “For the 2W category, the month witnessed a significant boost in auto retail, thus making it clock all-time high retails, buoyed by the festive excitement of Deepawali and enhanced by strong rural sentiments, thanks to thriving agricultural income. New product launches and better model supply further fuelled the market’s growth, while electric vehicle sales demonstrated an encouraging upward trajectory,” Singhania said.

While overall auto retail sales increased by 18%, sales of tractors and commercial vehicles (CVs) decreased by 21% and 2%, respectively. “The CV category saw a challenging Nov’23, driven by poor market sentiment. Seasonal slumps, exacerbated by unseasonal rains damaging crops and impacting transport demand, coupled with liquidity issues and delayed deliveries, further strained the industry. States going into elections also added to the woes, overshadowing the brief uplift from festive sales and the slight increase in tourism that helped in sales of buses,” Singhania adds.

According to the auto dealer body, the two-wheeler category would profit in the short term from increased liquidity, particularly in agricultural districts, as well as the ongoing marriage season, with about 38 lakh weddings likely to fuel vehicle sales.

However, FADA reports that concerns remain, as severe weather conditions affecting rabi farming may have an impact on rural earnings, potentially lowering sales It also warns that this might lead to higher inflation, making everyday necessities more costly and, as a result, reducing car sales in the short term.

In contrast, the CV category is likely to recover, owing to renewed economic activity following the elections and favorable moves in major industries such as cement and coal.

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