Festival spirit gives a lift to auto retail as rural demand picks up

New Delhi: Vehicle registrations in India - a proxy for retail sales – increased by 20% from a year earlier in September signalling continued demand momentum in the domestic market.

The September performance has brightened prospects of accelerated sales this month which will be witness to the key festivals of Navratri and Durga Puja, followed by Diwali in November.

Data collated by the Federation of Automobile Dealers Association (FADA) showed total retail sales of vehicles also grew 14% last month, compared to the pre-pandemic period of September 2019. Two-wheeler sales also, for the first time, rose 2% over September 2019, potentially marking the beginning of a turnaround in rural markets, FADA said.


While passenger vehicle registrations last month went up by 19% to 332,248 units, those of two-wheelers and commercial vehicles grew by 21.68% to 1.31 million and 4.87% to 80,804 units respectively.

Three-wheeler sales surged 48.58% to 102,426 units in September, but tractors reported a 9.66% drop to 54,492 units.

FADA president Manish Raj Singhania said there has been broad-based growth across segments last month, except for in tractors. Introduction of new models and attractive promotional offers helped increase demand for two-wheelers, especially in rural areas. “This uptick in demand was accompanied by heightened customer walk-ins and an overall positive market response. Additionally, better stock availability compared to the previous year and a favourable reception to newly launched entry-level products have set an optimistic tone for the upcoming festive season,” Singhania said.

The current two-wheeler across sales channels is about 33-35 days, according to FADA.

Sales of commercial vehicles too saw an uptick last month buoyed by a noticeable improvement in demand for coal, cement and general market loading sectors. Singhania said this positive trend can be attributed to the “adequate deployment of funds from the Central Government towards infrastructure development, which fostered an environment for bulk deals, especially in tippers and government sectors”. Additionally, the revitalized tourism market after the pandemic has helped push up demand for buses.

In the meantime, improved vehicle availability and launch of new and refreshed models helped accelerate passenger vehicle sales. “The market showed consistent demand for luxury cars and SUVs, signifying a robust consumer appetite for premium segments. The segment also witnessed the benefit of good pending bookings and the launch of promising products, laying the groundwork for potential growth in the upcoming festive season”, Singhania said. The current inventory of passenger vehicles is between 60-65 days.

Strong consumer sentiment and launch of new models during the upcoming festivals of Durga Puja and Navratri are expected to sustain the sales momentum in the two-wheeler market after Shradh when it is considered inauspicious to make new purchases.

In the commercial vehicle segment, Singhania said, “the cessation of monsoons, a resurgence in infrastructure projects and essential goods transportation” is expected to create robust demand. The market is likely to be buoyed by the availability of a broader range of vehicles and attractive finance options, thus facilitating bulk purchases.

New launches, improved availability of popular models and continued success of recently unveiled vehicles are expected to buoy demand in the passenger vehicle segment going ahead. “With inventory for PV reaching an unprecedented 60-65 days threshold, it's crucial for OEMs to proceed with caution, avoiding excessive inventory pushes, thereby ensuring a market that's both vibrant and stable during the festive spree”, Singhania said.