Auto sales shoot up in November, two-wheeler sales on the cusp of turning positive

The Indian automobile sector’s retail sales grew 26% in November over the year-ago period, rising to the highest level ever barring March 2020, which was an exception when sales were higher due to BS-4 to BS-6 transition, according to data collated by the Federation of Automobile Dealers Associations (FADA).

All categories were in the green with two-wheeler, three-wheeler, passenger vehicles, tractors and commercial vehicles growing by 24%, 80%, 21%, 57% and 33%, respectively.

If we compare the sales to the pre-Covid month of 2019, overall retail sales for the second consecutive month closed in the green by growing 1.5%. Except two-wheelers, all the other categories like three-wheelers, passenger vehicles, tractors and commercial vehicles grew.

The two-wheeler segment, which has grown 24% year on year but is the sole exception with a marginal 0.9% decline from the pre-Covid (November, 2019) period, is slowly turning the tides from negative to positive as the same can be witnessed from retail sales due to the ongoing wedding season.

The three-wheeler segment showed a massive growth of 80% YoY and 4% when compared to 2019, a pre-Covid year. The category, which was witnessing low demand during the peak Covid period, has now emerged as the highest growing category due to positive sentiments and fear of lockdowns out of mind. Also, electrification in the category continues at its highest pace.

The passenger vehicles segment grew 21% YoY and 5% when compared to 2019. Better availability of model mixes from past months, new launches and increase in rural demand continues to keep the segment in healthy condition. The compact SUV and SUV category coupled with higher variant models continues to rule the roost.

Commercial vehicles, a barometer of business activity, witnessed a growth of 33% YoY and 6% compared to 2019.

The RBI’s latest Consumer Confidence Data indicates a buoyancy among customers. Moreover, auto sales are also expected to go up once the harvest comes into the market and farmers start getting money in their hands.

But there are few challenges ahead as automobile makers are announcing price hikes to pass on the higher cost of inputs. In addition, with the policy rates being pushed up, the cost of borrowing to purchase an automobile also goes up.