Wedding season expected to boost vehicle sales: FADA

Chennai: The wedding season – November–December - is expected to boost automobile sales in India while challenges continue to persist for the manufacturers, the Federation of Automobile Dealers Associations (FADA) said on Wednesday.

According to the FADA, the ongoing marriage season, spanning November 23 to December 15, during which about 38 lakh weddings are expected to take place, and the liquidity boost in agricultural regions are likely to increase two-wheeler sales.

However, challenges persist as severe weather conditions impacting rabi cultivation might affect rural incomes, potentially dampening sales.

In contrast, the CV (commercial vehicle) category is expected to see some recovery, driven by renewed business activities post-elections and positive movements in key sectors like cement and coal.

Backlogs in orders might also contribute to a sales boost, the FADA said.

The FADA said that the passenger vehicle sector shows potential for growth with year-end offers and discounts expected to stimulate sales, along with an improved vehicle supply and new product launches.

However, the market faces hurdles in terms of a preference for 2024 manufactured vehicles and a notable slowdown in demand and bookings post festivities.

The current passenger vehicle inventory, still above 60 days, underscores the need for the vehicle makers to strategically reduce dispatches of slow-moving vehicles, especially in the entry-level category, the FADA said.

Historically, it is recognised that holding inventory beyond 30 days starts to erode dealer profitability as the financial burden is intensified by the high interest costs of inventory funding from financial institutions.

The FADA, as per its survey, said the average inventory for passenger vehicles ranges from 61-64 days and that of the two wheelers, it is 32-37 days.

On the sectoral sales during November, FADA President, Manish Raj Singhania said that it was an historic month for the automobile retail industry as it saw sales of 28.54 lakh units, overtaking the previous high of March’20 when the industry sold 25.69 lakh vehicles during the BS-4 to BS-6 transition.

Apart from this, two-wheeler and the passenger vehicle sectors also created new records. The two-wheelers category sold 22.47 lakh vehicles, an increase of 1.77 lakh vehicles compared to the previous high of March’20.

The passenger vehicle category also sold 3.6 lakh vehicles, about 4,000 vehicles more when compared to previous highs of October’22.

The last month was challenging for the commercial vehicle sector, driven by poor market sentiment.

Seasonal slumps, exacerbated by unseasonal rains damaging crops and impacting transport demand, coupled with liquidity issues and delayed deliveries, further strained the industry. States going into elections also added to the woes, overshadowing the brief uplift from festive sales and the slight increase in tourism that helped in sales of buses, Singhania said.