Automobile retail sales in India rose to a record high in November, aided by the best ever monthly performance across passenger vehicle and two-wheeler segments, dealers' body FADA said on Wednesday.

The overall retail sales stood at 28,54,242 units last month, 18 per cent higher over 24,09,535 units in November 2022.

Passenger vehicle (PV) retail sales rose to 3,60,431 units as compared to 3,07,550 units in the year-ago period, registering a growth of 17 per cent.

Similarly, two-wheeler registrations rose by 21 per cent last month to 22,47,366 units from 18,56,108 units in November last year.

"November '23 has become a historic month for the Indian auto retail industry as 28.54 lakh vehicles were sold, thus overtaking the previous high of March '20 when the industry sold 25.69 lakh vehicles," Federation of Automobile Dealers Associations (FADA) President Manish Raj Singhania said in a statement.

Two-wheeler and passenger vehicle segments created new records last month, he added.

The two-wheeler segment saw sales of 22.47 lakh vehicles, an increase of 1.77 lakh vehicles compared to the previous high of March 2020, while the passenger vehicle category also sold 3.6 lakh units, over 4,000 units more when compared to the previous high of October 2022, Singhania said.

He noted that PV sales last month were fuelled by Deepawali and the launch of new and appealing models.

The improved supply chains, coupled with new launches, effectively catered to the festive demand, marking the peak point in sales, Singhania said.

However, the period following the festivities saw a noticeable slowdown, coupled with a critical challenge of slow-moving inventory due to a mismatch in demand and supply, which is still not resolved, he added.

"This issue casts a shadow over the otherwise positive trends, highlighting the need for strategic adjustments in inventory management," Singhania said.

Two-wheeler sales were aided by enhanced demand in rural areas, new product launches, and better model supply, he added.

Three-wheeler retail sales rose to 99,890 units last month, registering a growth of 23 per cent from November 2022.

Tractor sales, however, witnessed a decline of 21 per cent to 61,969 units in November from 78,720 units in the year-ago period.

Similarly, commercial vehicle retail sales witnessed a dip of 2 per cent year-on-year at 84,586 units last month. "The seasonal slump, exacerbated by unseasonal rains damaging crops and impacting transport demand, coupled with liquidity issues and delayed deliveries, further strained the industry," Singhania said.

Elaborating on the sales outlook, FADA noted that in the near term, the two-wheeler category is poised to benefit from a liquidity boost, particularly in rural areas and during the ongoing marriage season, with around 38 lakh marriages expected to drive vehicle sales. However, challenges persist as severe weather conditions impacting rabi cultivation might affect rural incomes, potentially dampening sales, it added.

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

The PV sector shows potential for growth, with year-end offers and discounts expected to stimulate sales, along with improved vehicle supply and new product launches, it noted.

"The current PV inventory, still above 60 days, underscores the need for Original Equipment Manufacturers (OEMs) to strategically reduce dispatches of slow-moving vehicles, especially in the entry-level category.

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 industry body stated.

FADA represents over 15,000 automobile dealerships with over 30,000 outlets across the country.

FADA said it collated the registration data from 1,355 out of 1,442 regional transport offices (RTOs) across India.

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