Two-wheeler Segment Grows 12.56% YoY In Q1 Of FY'25

The Indian auto retail sector has demonstrated a commendable performance in Q1 of FY'25, achieving a substantial overall growth of 9.40 per cent YoY. This positive momentum was primarily driven by robust gains in the 2/3W segments. Two-Wheelers (2W) led the charge with an impressive 12.56 per cent YoY increase, followed by Three-Wheelers (3W) with an 11.36 per cent rise, Passenger Vehicles (PV) with a 2.53 per cent growth and Commercial Vehicles (CV) growing by mere 0.7 per cent. However, the Tractor (Trac) segment faced a decline of 12.44 per cent."

On releasing Q1 figures, FADA President, Manish Raj Singhania, said "This year, the monsoon's advancement up to Maharashtra was on track, but it lost momentum thereafter, delaying rains in key states such as West Bengal, Bihar, Uttar Pradesh, Chhattisgarh and Madhya Pradesh. This situation exacerbated the severe heatwave in northwest India, leading to a prolonged dry spell. The intensified heatwave not only delayed the sowing operations of kharif crops in northern and north-western regions but also adversely impacted rural sales."

The recovery in the 2W segment is promising, largely due to the emerging performance in rural areas, although these are early trends. The segment also faced significant challenges from extreme heat and the election period, resulting in a 13 per cent reduction in walk-ins during May and June. Conversely, the 3W segment continues to perform well, driven by notable electrification.

CV experienced a slowdown due to the electoral period and a pause in infrastructure projects. In April, elections dampened sentiment, causing delays in expansion plans. Additionally, limited financing options and regional challenges, such as water scarcity, further impacted performance.

Singhania further added, "PV already at an all-time high, is facing difficulties in maintaining high growth levels. We had anticipated that growth for this fiscal year would remain below 5 per cent. Despite strong bookings and customer flow, high competition, excess supply and discounting presented challenges for sustained growth. Dealers reported significant impacts from elections, extreme heat and market liquidity issues. The extreme heat led to an 18 per cent drop in showroom walk-ins in May, with inventory levels reaching an all-time high of 62 to 67 days by the end of June. Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to the extreme heat and delayed monsoons, resulting in 15 per cent fewer walk-ins."

At the end of Q1, the PV segment has shown resilience but continues to face headwinds from environmental and market challenges.

FADA remains committed to advocating for prudent inventory control, improved financing options and strategic planning to ensure the auto retail sector's resilience and sustained growth.