Wedding bells ring in 16% rise in February auto sales, 2 wheeler sales yet to hit pre-pandemic levels: FADA

• Auto sales in February report a 16% year-on-year growth.
• While the three-wheeler and passenger vehicles segment crossed pre-pandemic levels, the two-wheeler segment has failed to do so.
• FADA expects strong auto sales in March 2023 but is cautious of a weaker monsoon.

The Indian auto industry reported a 16% year-on-year increase in sales in February 2023. Despite this, sales are down by 8% as compared to pre-pandemic levels in February 2020.

According to a report by the Federation of Automobile Dealers Associations (FADA), all categories reported double-digit growth in February 2023.

February 2023 auto sales data

Source: FADA Research

Two-wheeler sales fail to reach pre-pandemic levels

Two-wheeler sales recorded a 15% year-on-year growth but were down by 14% when compared to February 2020’s pre-pandemic levels.

The onboard diagnostics (OBD-2) norms which will come into effect from April 2023, are believed to be among the factors for the increased sales. OBD-2 compliant vehicles are expected to cost more.

The wedding season is also believed to have boosted two-wheeler sales.

Three-wheeler segment continues to shine

The three-wheeler segment continued to grow, and has finally crossed the pre-pandemic levels. The segment reported an 81% year-on-year growth, up by 3% compared to February 2020.

“This category has seen drastic growth due to central and state government’s subsidy along with good scheme promotion done by the states. Along with this, aggressive finance schemes continue to aid growth for this category,” said FADA in its report.

Passenger vehicle segment grows

The passenger vehicle segment has once again reported strong growth at 11% year-on-year. As compared to February 2020, sales grew by 16%.

“Launch of new models, continuously improving supply coupled with healthy booking to cancellation ratio and wedding bells kept the momentum going for this already well to do segment,” FADA added.

Commercial vehicles record growth but behind pre-pandemic levels

The commercial vehicles segment recorded a 17% year-on-year growth in February 2023, but the sales are down by 10% compared to the pre-Covid levels of February 2020.

“Walk-in enquiries improved during the month. Apart from this, demand has also increased due to change in OBD norms which will see price hikes. On the government’s side, infrastructure spending has been healthy. This is also aiding better sales,” FADA added in its report.

‘Outlook positive but weaker monsoon may play a spoilsport’

FADA in its report, said that there are many factors in favour of strong sales in March 2023, including the festive season, improved supply of vehicles, upcoming OBD-2 norms, last month of the financial year and more.

However, a slowdown in private consumption expenditure and a weaker monsoon may play spoilsport.

“India’s chief economic advisor said that urban demand recovery is taking place at a faster pace than rural. This along with sharp slowdown in private consumption expenditure to a 2-year low suggests a softening in household spending demand amid inflationary pressure as post Covid pent-up demand starts to fade,” said FADA in its report.

A better monsoon forecast is expected to boost sales in rural areas.

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