Retail sales of passenger vehicles grew 11% year-on-year in the calendar year 2023 to 38.60 lakh units, aided by strong demand for SUVs, according to data released by the Federation of Automobile Dealers Associations (FADA).

In the PV category, SUVs in particular saw strong demand, with extended waiting periods for key models.

This surge was fuelled by aggressive year-end promotions and the introduction of new models, says FADA president Manish Raj Singhania.

However, a significant concern was the high inventory levels, reflecting over-supply, Singhania says. “This ongoing issue of high PV inventory, despite a slight decrease by the year's end, remains a critical area for OEMs to address, emphasizing the need for further moderation in inventory management."

On the near-term outlook, FADA says the focus will be on clearing pending bookings and launching new 2024 models. “Despite concerns over high inventory levels and the impact of year-end discounts, positive market sentiments and the introduction of new models are likely to drive growth. However, challenges remain in terms of supply constraints for higher variants and shifting consumer demands towards SUVs,” the dealers’ lobby says.

In its long-term view, FADA says PVs are expected to see growth with new product launches and stable market sentiments. “The market is hopeful about improved vehicle availability and demand driven by new models with many OEMs launching their EVs. However, caution should be exercised regarding excess inventory as well as the need to match production with actual market demand,” it says.

“December'23 was an overall good month for Indian Auto Retail, as total retails during the period saw a growth of 21% YoY. All categories closed in green, with 2W, 3W, PV, Trac and CV growing on a YoY basis by 28%, 36%, 3%, 0.2% and 1.3% respectively,” says Singhania.

“Similarly, for CY'23, the year ended with double-digit growth as total retails during the year saw an increase of 11% YoY. Here also, all categories closed in green, with 2W, 3W, PV, Trac and CV growing on a YoY basis by 9.5%, 58.5%, 11%, 7% and 8% respectively,” he adds.

In the two-wheeler category, key drivers included an abundance of marriage dates and the distribution of harvest payments to farmers, which enhanced purchasing power, says the FADA president. “Additionally, the availability of a wide range of models and variants, coupled with favourable weather conditions and a generally positive market sentiment, contributed to this robust growth. Enhanced product acceptance, particularly among the youth, and lucrative financial options, coupled with the anticipation of price increases in January 2024, spurred purchases,” he says.

The commercial vehicle category experienced positive growth as increased industrial activity and infrastructure development continued to fuel demand for M&HCVs, according to Singhania. “The bus segment also saw a rise, particularly in tourism and transportation, aided by orders from various state transport departments.”

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