Two-Wheeler Sales Outlook for First Half of 2024

The two-wheeler industry is gearing up for growth, buoyed by a significant uptick in sales observed in December. According to the Federation of Automobile Dealers Association (FADA), two-wheeler sales surged by 28% year-on-year, surpassing the overall auto retail growth rate of 21% for the month. As the industry moves into the first half of 2024, several factors are expected to sustain this momentum.

Short-Term Drivers

In December, the surge in two-wheeler sales was attributed to a confluence of factors, including an abundance of wedding dates and the distribution of harvest payments to farmers. These factors bolstered purchasing power, combined with a diverse range of models, favorable weather conditions, and positive market sentiment.

Looking ahead, increased marketing efforts, anticipation surrounding general elections, potential improvements in crop prices, and potential reductions in fuel prices are expected to drive demand post-mid-January. This surge is anticipated as the inauspicious Kharmas period, which began on December 16, concludes on January 15.

Long-Term Outlook

Beyond the immediate term, festivals and a robust wedding season in the first quarter of 2024 are anticipated to sustain demand. Additionally, the industry expects a boost from new model launches, particularly in the first half of the year, alongside an overall improvement in economic conditions and increased participation in electric vehicles (EVs). Factors such as lower fuel prices and crop payments to farmers are anticipated to further enhance customer sentiment and drive demand.

Passenger Vehicle Sales Performance in December 2023

Passenger Vehicles (PVs): Inventory Challenges Persist

In contrast to two-wheelers and three-wheelers, passenger vehicle (PV) sales saw modest growth of 3% year-on-year in December. The PV segment continues to grapple with challenges related to high inventory levels, despite a slight reduction observed towards the end of December. On average, PV inventory levels remain elevated, ranging from 55 to 58 days, highlighting the need for improved inventory management strategies.

SUVs Witness Strong Demand Amid Challenges

While PV sales face inventory challenges, SUVs experienced robust demand, leading to extended waiting periods for key models. This surge in demand was fueled by aggressive year-end promotions and the introduction of new models.

Future Prospects and Challenges

In the short term, the PV sector must prioritize clearing pending bookings and launching new 2024 models. Despite concerns regarding high inventory levels and the impact of year-end discounts, positive market sentiments and the introduction of new models are expected to drive growth.

Looking ahead to 2024, the PV market is anticipated to remain dynamic with the introduction of new launches, stable market sentiments, and increased focus on electric vehicles by OEMs. However, stakeholders must exercise caution to manage excess inventory and align production with market demand effectively, emphasizing the importance of prudent inventory management practices.