Retail sales of automobiles jumped 27% year-on-year in April 2024 on the back of strong two-wheeler sales which grew 33% to 16.43 lakh units.

“In April 2024, the Indian Auto Retail sector achieved a robust 27% YoY growth. The two-wheeler (2W), three-wheeler (3W), passenger vehicle (PV), tractor (Trac) and commercial vehicle (CV) segments grew by 33%, 9%, 16%, 1%, and 2%, respectively,” says FADA president Manish Raj Singhania.

While some attribute this growth to the shift in Navratri to April instead of March last year, the overall increase was significant, says Singhania. Comparing combined March and April 2024 with the same period last year shows a 14% growth for the entire industry.

The two-wheeler segment saw notable growth due to improved supply and the increasing demand for 125cc models, says FADA. “Positive market sentiments, bolstered by stable fuel prices, a favourable monsoon outlook, festive demand and the marriage season, contributed to this rise. New model launches also helped drive growth, despite some delays in supply,” says Singhania.

The passenger vehicle category experienced double-digit growth, supported by enhanced model availability and favourable market sentiments, particularly around festive events like Navratri and Gudi Padwa. “Despite strong bookings and customer flow, high competition, excess supply and discounting presented challenges for sustained growth. Additionally, the lack of new models in some portfolios impacted market traction,” says Singhania.

The commercial vehicle segment showed modest 2% growth and a 0.6% month-on-month decline. “Positive momentum was found in bulk and corporate deals and school bus demand, though elections dampened sentiment, with customers delaying expansion plans. Limited finance options and regional challenges such as water scarcity further impacted performance,” says the FADA president.

The dealers’ lobby says the outlook for May 2024 is shaped by several positive indicators. “Improved vehicle supply and strategic planning in the 2W segment have led to rising customer bookings and better market sentiment, driven by favourable crop yields. In the PV segment, new model launches and favourable monsoon forecasts are set to stimulate customer interest, while bulk deals in the CV segment should bolster demand in sectors like iron ore, steel, and cement. The appeal of new electric models and sustained demand for conventional vehicles are likely to provide further momentum,” it says.

FADA, however, says election uncertainty continues to affect market sentiment, delaying customer conversions and stalling purchasing decisions. “Financial constraints, extreme temperatures, and overcapacity in the CV segment could slow growth, while heavy discounting in the PV segment could impact profitability. Seasonal factors such as no marriage dates and a lack of major festive events may also influence demand,” it says.

Election-related uncertainty and financial constraints remain key challenges that the industry will need to monitor closely to navigate this evolving landscape effectively, it adds.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.