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India’s automobile retail sales in February 2023 have seen a double-digit year-on-year growth driven by strong demand for passenger vehicles and two-wheelers, according to the Federation of Automobile Dealers Associations (FADA).
The total registrations across all segments increased by 16% YoY to 17,75,424 units last month, with passenger vehicle retail sales rising by 11% to 2,87,182 units. Meanwhile, two-wheeler registrations rose by 15% to 12,67,233 units. FADA’s president, Manish Raj Singhania, attributed the momentum to the launch of new models, improved supply, and wedding season.
Commercial vehicle retail sales rose by 17% to 79,027 units, while three-wheeler retail sales jumped by a massive 81% to 72,994 units. Tractor sales also rose by 14% YoY to 68,988 units in February. However, Singhania highlighted that high inflation and poor sentiment have kept customers away.
Singhania warned that the return of El Nino conditions in the Pacific could result in a weaker monsoon in India, leading to lower output and higher prices impacting auto sales. Although the month of March looks positive, FADA remains cautious in the medium-term until a better monsoon forecast is announced by the India Meteorological Department.
Overall, Singhania believes that multiple festivals in the near-term are expected to drive India’s automobile sales, but India’s chief economic advisor recently noted that urban demand recovery is outpacing rural, which could suggest a softening in household spending demand amid inflationary pressure as post-COVID pent-up demand fades.
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