February passenger vehicle sales at all-time high but FADA flags inventory concerns

The Federation of Automobile Dealers Associations (FADA) released its data for February 2024, indicating a 13% Year-on-Year (YoY) growth across all vehicle categories compared to the same period last year.

Passenger vehicle (PV) sales reached unprecedented levels, marking the highest February sales figures ever, with a YoY growth of 12%. However, the segment also faces challenges, notably elevated inventory levels, which stand at 50-55 days, raising concerns among industry stakeholders, according to FADA.

The association said it is imperative for passenger vehicle original equipment makers (OEMs) to "undertake adjustments in production to mitigate these high inventory levels".

Two-wheeler sales witnessed a notable uptick of 13% YoY, with the rural sector acting as a key driver behind this growth. FADA said the segment was "driven by premium model demand, strong entry-level segment performance, with broader product availability and compelling offers enhancing product acceptance. Factors like favourable marriage dates and improved economic conditions also contributed to this positive growth."

Three-wheeler sales recorded a substantial surge of 24% YoY, with electric vehicles (EVs) accounting for more than half of this increase. This underscores the growing acceptance and adoption of electric mobility solutions within the commercial vehicle space, FADA noted.

The tractor segment witnessed a commendable growth of 11% YoY, reflecting the continued momentum in agricultural activities. Similarly, commercial vehicle (CV) sales also saw a positive growth trajectory, albeit at a relatively modest rate of 5% YoY.

Looking ahead, FADA suggests cautious optimism for the near-term outlook in March 2024. While the industry remains hopeful about sustaining the growth momentum, factors such as supply chain disruptions and evolving market dynamics necessitate a vigilant approach.