Retail sales of automobiles in December fell 5.4 per cent to 16.22 lakh units from 17.14 lakh units a year ago. Two-wheelers retail sales dipped 11.19 per cent to 11.33 lakh units from 12.75 lakh units a year ago, a decline of 11.19 per cent.
According to the Federation of Automobile Dealers Associations of India (Fada), car sales were at 2.8 lakh units compared with 2.5 lakh units in December 2021, up 8.15 per cent, while commercial vehicles segment witnessed retail sales of 66,945 units compared with 60,491 units in December 2021, a growth of 10.67 per cent.
Fada said global geopolitical headwinds, tightening monetary policy and the lingering effect of the pandemic have combined to create a gloomy global outlook.
“Auto OEMs have done routine price hikes in December and have announced the same at the beginning of this year. Apart from this, BS-VI phase II norms coming in, there will be further price hikes across all categories,” it said, adding to counter this, auto OEMs should announce special schemes so that retail sales momentum continues.
Due to inflation pressure, upcoming change in vehicle norms resulting in price hikes, Fada said it remains cautious during the last quarter of FY23. In 2022, vehicle sales grew 15 per cent to 2.11 crore units from 1.83 crore units in 2021.
However, sales were lower by as much as 10 per cent from 2019, a pre-Covid year.
“Due to reasons like rise in inflation, increased cost of ownership in the rural market yet to pick up fully and increased EV sales, the ICE (internal combustion engine) two-wheeler segment is yet to see any green shoots,” said Fada president Manish Raj Singhania.
Brokerages were upbeat on the prospects in the fourth quarter. Ashwin Patil at LKP Securities said December was sequentially low because of a high base of November and it is a seasonally weak month.
The fourth quarter of the fiscal will witness stronger growth in the passenger vehicle segment as the chip shortage issue eases further and launches happen on both ICE (internal combustion engine) and EV (electric vehicle) front. Seasonally, too, January-March is a good quarter for the sector.
“We remain positive on the entire automobile sector. However, our choice is in the following order — commercial vehicles, PVs and two-wheelers,’’ the brokerage added.
Mansi Lall, research analyst at Prabhudas Lilladher, said the premiumisation trend will play out across segments.
Companies with focus on SUVs such as Mahindra & Mahindra and Tata Motors will continue to do well. Market leader Maruti Suzuki is also expected to do well given its strong distribution reach and sustained demand in the New Brezza and Grand Vitara.
