OEMs accelerate automobile dispatches amid festive season

Archana Rao | October 26, 2023

With overcoming production limitations and consumer demands, the Indian auto sector is once more seeing growth. Given that the second half of the year is of the utmost significance to the overall health of the automotive industry, it is a crucial time for OEMs, dealers, and customers. The availability of festival discounts in 2023 is higher than it was during the same period in 2022, as the latter year was affected by issues with supply chain restrictions pertaining to automotive components.

Car discounts usually increase by 40–50%, depending on the type of vehicle and dealership location. Customers in India view the festive season, which runs from the end of August to December, as a fortunate time to purchase high-quality, valuable goods. OEMs anticipate phenomenal sales results as they introduce new automobile models to the domestic market.

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Photo Source: Pexels

The festive season brings cheer to the automobile and its allied industries. India’s automobile industry is fast becoming the pillow of the economy as evidenced by its sales and export performance in FY 2023-24. With an astounding 3,63,733 vehicle units and SUVs sold in September, India’s automotive industry reported record monthly sales.

As per industry experts, OEMs or Original Equipment Manufacturers have accelerated dispatches from their facilities, purposefully accumulating stocks ahead of the holidays of Dussehra and Diwali.

Accelerating Growth

Over the past 20 years, the Indian automotive sector has advanced significantly, drawing attention from around the world and positioning itself as a strong challenger for the top table. Globally, the manufacturing output of two-wheelers ranks second, commercial vehicles rank seventh, passenger vehicles rank sixth, and tractors rank first. India has closed the gap over a number of well-established locales to become one of the most sought-after locations in the world for producing premium automotive components and vehicles of all types over the last ten years.

The success story of the nation’s automobile industry continues well into the end of the year. In October, the Society of Indian Automobile Manufacturers released data showing that 3,61,717 units of passenger vehicles were sold last month, as compared to 3,55,043 units in September 2022. From the months of July to September 2023, 10,74,189 units of PVs were sold in India whereas during the same months last year, 10,26,309 units of PVs were sold in the domestic market

Vinod Aggarwal, President, SIAM has said that the passenger vehicle, three-wheelers, and commercial vehicle segments continue to witness growth in Q2 of 2023-24, although two-wheelers wholesale numbers have posted a marginal de-growth, compared to Q2 of last year, the retail have been encouraging.

“As we get into the festival season, all segments of the Industry are optimistic and look towards posting good numbers in Q3 as well. This growth in the automobile sectors can be attributed to the all-round Economic growth of the country, which is also enabled through the conducive Government policies,” Aggarwal has said.

It is worth noting, that amid the beginning of the festive season, Indian automakers are offering customers discounts ranging from Rs 20,000 to Rs 200,000. These consist of corporate discounts, exchange, loyalty, and cash discounts. Furthermore, dealers are contributing by providing accessory discounts. While some holiday discounts are still in effect for slow-moving models—particularly small hatchbacks and sedans—they expire on October 31.

Performance of different automobile segments

Commenting on the Q2 2023-24 performance, Rajesh Menon, Director General, SIAM said, “Sales of both Passenger Vehicles and Three Wheelers in Q2 of FY2023-24 has been the highest ever in Q2. Passenger Vehicles have posted a growth of 4.7% and Three Wheelers have posted a growth of 62.2%, compared to Q2 of last year. The Passenger Vehicle segment crossed 2 million units in sales for the first time, in the first half of the current financial year. Commercial Vehicles also posted a decent growth of 6.9% in this Quarter, compared to Q2 of last financial year, driven by good growth in Medium and Heavy Commercial Vehicles. The two-wheelers segment has declined by (-)1.6% in this Quarter, as compared to last year.”

In India, leading car manufacturer such as Maruti Suzuki is providing discounts of Rs 61,000 on the Alto, Waggon R, Celerio, and S Presso when bundled with dealer deals, while the Swift is carrying offers worth Rs 54,000.

Another leading automobile association, the Federation of Automobile Dealers Association (FADA) has noted that the number of inventory days for passenger cars has increased dramatically to 60–65 days.

Automobile dealers rejoice in industry performance

Earlier in October, FADA President, Mr. Manish Raj Singhania commented on H1 FY’24 auto retails, noting as Fiscal Year 2024 unfolded, the auto retail sector in India embarked on a journey of cautious optimism and resilience amidst a mix of obstacles and victories across various vehicle categories.

He said that the initial modest 4% decline in April’s overall vehicle retails was not only a reflection of the dynamic nature of the automotive market but also a precursor to a story of gradual recovery and growth that would unfold over the subsequent months, culminating in a robust 20% YoY growth in September.

The association president has also said that the H1 FY’24 is one of resilience and recovery, with the total auto retail registering a 9% growth YoY.

“All categories also showed YoY growth with 2W, 3W, CV, PV and Trac growing by 7%, 66%, 3%, 6% and 14% respectively,” FADA president has said.

Singhania added, “The 3W segment was the undisputed star, with a remarkable 66% YoY growth, consistently registering unparalleled sales figures month after month. Notably, the first half of FY’24 saw the 3W segment retailing a record-breaking 5,33,353 units, significantly outperforming the H1 FY’19 figures of 3,58,187. This extraordinary performance in the 3W category underscores the sector’s vigorous recovery and adaptability in navigating through the complex market challenges presented by the ongoing pandemic.”

Festive cheer boosts sales of commercial vehicles

Commercial vehicles such as tractor sales have clocked in impressive growth. The first half of FY’24 witnessed record-breaking retails of 4,44,340 units, reflecting a substantial 14% YoY growth. This performance surpasses the sales figures of H1 FY’23, which stood at 3,89,815. The CV sector experienced robust sales, registering 4,65,097 units, only second to its record in H1 FY’19 with 4,72,492 units. However, the 2W segment is under stress, still far from its H1 FY’19 peak of 97,27,200 units, reflecting the diverse challenges and successes within India’s auto retail sector.

With the beginning of the much-awaited festive period, auto industry leaders are optimistic about seeing renewed consumer interest and potential demand surge. Automobile manufacturers and dealers anticipate a season of growth and prosperity for the auto retail sector, moving from cautious optimism to a hopeful and positive outlook for the market.