Indian retail vehicle sales surged by 20% in September, according to the Federation of Automobile Dealers Association (FADA). This increase in sales is attributed to easing monsoon concerns and greater demand from rural areas. With a 42-day festive season approaching, FADA has shifted its stance from “cautiously optimistic” to “optimistic,” anticipating robust retail purchases during the festive season, which will help reduce inventory buildup. Favorable monsoon patterns, with India receiving 94% of expected rainfall, have set a positive backdrop for this period.
In September, retail sales of vehicles reached 1,882,071 units, marking a 20.4% increase. Passenger vehicle volumes saw a 19% rise, while two-wheeler sales surged by 21.7%, benefiting from the introduction of new models and attractive promotional offers. Additionally, a recovery in rural demand has contributed to improved sentiment.
Three-wheeler sales experienced significant growth, rising by 48.6% to 102,426 units, surpassing the record highs achieved in July and August. However, tractor sales, a key indicator of the rural economy, declined by 10% in September. This decline is noteworthy as tractor sales have been closely monitored as an indicator of economic health in rural areas.
Despite the overall positive trend in sales, FADA expressed caution about the highest-ever inventory levels. Inventory days, which indicate how long dealers store vehicles before selling them, ranged from 60-65 days in September for passenger vehicles, up from 58-63 days in August.
Automaker Mahindra and Mahindra reported a 1% decrease in tractor sales, while its Swaraj division recorded a 12.3% increase in sales. This divergence highlights the varied impact of market dynamics on different segments of the automotive industry in India.