Passenger vehicle segment logs best-ever February, sales jump 12% YoY

Auto companies in India saw 12% growth in passenger vehicles sales in February 2024 compared with a year ago, achieving the highest sales figures ever recorded for the month.

According to the monthly sales data released by the Federation of Automobile Dealers Associations (FADA), a total of 3,30,107 passenger vehicles were sold in February, 12.36% higher than 2,93,803 units sold a year ago.

FADA said that this upward trajectory was propelled by the strategic introduction of new products and enhanced vehicle availability.

Despite the sales growth in February, FADA highlighted that persistently elevated inventory levels present a significant concern for auto dealers across India. At the end of February, average inventory for passenger vehicles ranged from 50-55 days. The inventory days is essentially a metric to measure how long a product is in storage before being sold.

In a statement released on Thursday, FADA said, “It is imperative for PV OEMs (original equipment manufacturers) to undertake adjustments in production to mitigate these high inventory levels, thereby reducing the financial burden of carrying costs on dealers as it is vital for maintaining the financial health of dealers.”

Meanwhile, auto retail sales saw a robust overall growth of 13% in February to 20.29 lakh units, with every vehicle category including two-wheelers, three-wheelers, passenger vehicles and commercial vehicles registering a growth.

While two-wheeler sales grew 13% year-on-year in February to 14.39 lakh units, the three-wheeler market saw a significant 24% increase to 94,918 units. The commercial vehicle sector achieved a 5% year-on-year growth during the month with sales of 88,367 units.

Looking ahead, FADA said that the near-term outlook for March 2024 in the auto retail sector is one of cautious optimism.

The key challenges include anticipation of elections potentially deferring purchases across segments. External factors like crop failures in rural areas could also dampen market sentiment and financial liquidity, posing additional hurdles to sustained growth.