After best festive sales in 4 years, automobile sales may face headwinds

In the next few months, auto sales are expected to be under pressure for reasons such as customers waiting for new launches next year and an increase in vehicle prices.
Image used for representational purpose only. (File Photo)
Image used for representational purpose only. (File Photo)

NEW DELHI: Auto sales hit a four-year peak in the recently concluded 42-day festive season, according to sales data released by the Federation of Automobile Dealers Associations (FADA) on Monday. Retail sales across categories grew 29% year-on-year (YoY) during the period to 28.88 lakh units as compared to the 42-day period last year. When compared with the pre-covid festive season of 2019, sales this time was up by 6%.

“Festive’22 brought cheers to the auto industry as for the first time customers of every category came out in good numbers and took part in festive purchases. As anticipated earlier, PV segment saw the best year in a decade by outgrowing 2020 numbers by 2%,” said FADA President Manish Raj Singhania. More than 4.56 lakh passenger vehicles (PVs) were sold this festive season, up 34% YoY.

In the next few months, however, auto sales are expected to be under pressure for reasons such as customers waiting for new launches next year and an increase in vehicle prices due to new production norms. Home-grown automaker Tata Motors has already implemented a price hike across its PV range by 0.9%. The carmaker attributes this to the direct impact of increased input costs.

“With festivities ending, the immediate next month generally witnesses a certain amount of softness in sales. While farmers will start receiving their crop realisations next, the overall sentiment continues to show some headwinds, especially in the 2W rural segment,” said FADA in a note.

It added that most automakers will now start migrating towards manufacturing OBD-2 norms vehicles. This will definitely see a steep price increase across all categories of vehicles as and when they hit the market.

Two-wheelers sales this festive season grew by 26% to 21.55 lakh units and three-wheelers reported the highest growth at 68% to 55,435 units. Commercial vehicles and tractors reported a 29% and 30% growth to 105,566 units and 77,602 units, respectively.

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