This growth in monthly registrations was a sharp pickup from the previous two years when the numbers had dropped – by 5.4% in December 2022 and 16.6% in December 2021. It has been driven by robust supply of vehicles, better promotional offers and increased consumer appetite to buy new cars, according to industry insiders.
As many as 1,990,915 vehicles were retailed last month, up 21.14% compared with 1,643,514 units a year earlier, show data collated from the Vahan portal of the ministry of road, transport & highways by the Federation of Automobile Dealers Association (FADA). Vehicle registrations across categories increased in December, said FADA president Manish Raj Singhania.
In the two-wheeler segment, particularly, retail sales remained strong driven by demand during the marriage season. Payments to farmers for their crops, which enhanced their purchasing power, availability of a wide range of models and variants, favourable weather conditions and a generally positive market sentiment contributed to robust growth, he said.
Sales of two-wheelers rose 27.57% to 1,449,693 units in December.
Singhania said enhanced product acceptance, particularly among the youth, and lucrative financial options, along with the anticipation of price increases in January 2024, spurred purchases. Average inventory of two-wheelers currently stands 15-20 days, he said.
In the passenger vehicle (PV) segment, registrations rose 2.65% to 293,005 units in December. SUVs in particular saw robust demand, with long waiting periods for key models. This surge was fuelled by aggressive year-end promotions and the introduction of new models. However, Singhania said, a significant concern is the high inventory levels, reflecting over-supply.
The average stock of PVs in the network currently is 55-58 days.
“This ongoing issue of high PV inventory, despite a slight decrease by the year’s end, remains a critical area for OEMs to address, emphasising the need for further moderation in inventory management,” he said.
Meanwhile, increased industrial activity and infrastructure development continued to support demand for medium and heavy commercial vehicles. The bus segment also saw a pickup, particularly in tourism and transportation, aided by orders from state transport departments.
Singhania said: “Additionally, robust liquidity in rural areas and the financial boost from crop sales supported customer purchases, although retail cases remained somewhat subdued despite some pre-buying in bulk.”
For the calendar year 2023, retail sales of vehicles rose 11% to 23,867,990 units.
In the PV segment, where the retail numbers indicated 11% growth to 3.86 million units, sales were driven by a “strong increase in demand for SUVs, which now accounts for nearly half of all vehicles sold in the domestic market”, said Shashank Srivastava, senior executive officer (marketing and sales) at market leader Maruti Suzuki.
Tarun Garg, chief operating officer at Hyundai Motor India, the second largest carmaker in India, said the growth rate is likely to moderate in the PV segment in the ongoing calendar year on a high base.