Analysis of Auto Sales Data in India for November 2024

A company’s top-line growth, which is basically sales growth or revenue growth, is an important factor that determines its future potential. In the Indian automobile industry, auto makers report auto sales data every month, which becomes a barometer of the company’s growth. Additionally, it also gives investors an indication of the company’s growing presence in the market. 

So, in this blog, we will analyze the monthly auto sales figures of different automakers in India and understand the importance of auto sales data as an investor and its impact on the stock prices for short-term traders. 

Overview of Auto Sales in India

The auto sales figures serve as a vital economic indicator, reflecting consumer confidence and the economic health of India. It also enables automakers to fine-tune production levels, manage inventory effectively, and align product offerings with market preferences. Finally, the analysis of auto sales figures plays a pivotal role in driving growth, fostering innovation, and sustaining employment within the Indian automotive industry. 

The Importance of the Automobile Industry in India’s Economy

As mentioned above, the auto sales figures serve as an economic indicator that reflects consumer confidence as rising middle-class income and a huge youth population will result in strong demand. The automobile industry contributed 7.1% of the country’s GDP in 2021-2022, which was only 2.77% of GDP in the year 1992-1993. 

By the end of 2024, India aims to double its auto industry size to ₹15 lakh crores.

The automotive industry is divided into sub-segments, which are: 

1. Two-wheeler vehicles, where India is the world’s largest manufacturer. 
2. Passenger Vehicles 
3. Commercial vehicles 
4. Three-wheelers 
5. Quadricycles 

A Snapshot of Recent Years’ Sales Trends

As per the report published by Society of Indian Automobile Manufacturers (SIAM) in 2022–2023, the two-wheelers and passenger cars accounted for 75% and 18% market share respectively.

Monthly Analysis of Auto Sales Figures

Source: Edge Report by StockEdge

The above figures show the company’s units sold month on month. The higher the percentage change from current month to its previous month indicates the automaker managed to sell a higher number of units which is a sign of high demand for its product in the market. 

Understanding the Monthly Sales Data Collection Process

In the data collection process, dealers all over the country play a pivotal role, and the auto sales figures for each month are collected and sent to the automobile manufacturer. By the 1st of every month, the manufacturers of automobile companies share the report of total units sold by them. Units Sold is basically the number of vehicles purchased by consumers in a given period. Accurate and timely reporting from dealerships ensures the reliability of auto sales data. This metric is a fundamental measure of how well a particular automaker or brand is performing in the market. 

Detailed Review of Sales Figures by Month

The above data shows you the % change in monthly sales of different automobile manufacturers in India for Jan, February and March of 2024. Here you need to follow a particular trend in the sales data, whether the automobile manufacturer has been consistently growing positively or not. 

For instance, you can see Ashok Leyland here the % change in MoM sales has turned from negative in the month of Jan 24 to a 30% rise in the month of March 24, which is a significant improvement, whereas for Hero Moto Corp, the % Change in MoM sales remain positive for all three months after the growth has been slowed down from 10% in the month of Jan 24 to only 4.7% in the month of March 24. However, please note that this does not mean that Ashok Leyland is a good buy, or Hero Moto Corp is not. There are other fundamental factors involved. 

Additionally, there are times when you may not find conclusive trends because of seasonality, so the comparison of YoY growth of auto sales figures is more logical. 

But in such scenarios, based on auto sales figures, there may be an impact on the stock price in the short term, which can be capitalized by traders.

Let’s look at an example: 

This is the daily chart of Ashok Leyland; as earlier, we were discussing how the company’s % change in MoM sales has turned from negative in the month of Jan 24 to a 30% rise in the month of March 24. Its effect is also reflected in the share price as well. When the auto sales data for March 2024 arrived on the 1st of April 2024, the stock price gained 2.82%, and later, after a short pullback, the stock price surged nearly 11% over the month. 

Similar trend can be seen in the stock price movements of Escorts Kubota. The company registered a 27% MoM growth in Jan 2024 but sales growth declined to 5.7% in February of 2024 and then a sharp jump of 30% in March 2024. 

As you can see, the share price of Escorts got affected after the auto sales data was released every month.  

However, please note there is no certainty that if auto sales data turn out to be good or bad there is an immediate effect, you must consider other technical factors as well before initiating any trade. 

Segment-wise Breakdown 

As per the data published by the Federation of Automobile Dealers Associations (FADA) for FY 24, the overall auto industry achieved a growth of 10% YoY. Here, the auto sales figures are the total number of units sold from FY 23-24. 

Passenger Vehicles – Analysis and Trends

The growth in the PV segment for FY 24 was 8.45%, which is at its all-time high for the Indian automobile industry. The main drivers were rising middle-class disposable income along with improved availability of compelling model mix and especially derived by the SUV segment, which claims to be 50% of the market share. 

Commercial Vehicles – Insights into Sales Data

This segment is mainly driven by government orders and tenders. As of FY 24, the commercial vehicle segment grew by 5% YoY. 

Electric Vehicles (EVs) in India

The Eclectic Vehicles (EV) segment in India is witnessing significant growth and attention in recent years. As the world moves towards sustainable transportation solutions, India is also making strides in embracing electric vehicles as a key component of its mobility ecosystem.

The EV segment in India is not only about cars; it encompasses a wide range of vehicles, including electric scooters, motorcycles, rickshaws, and buses. This diversity reflects the potential for electrification across different modes of transportation in the country.

Growth of EV Sales in India

India’s electric vehicle (EV) market is experiencing rapid growth, driven by government incentives, rising fuel prices, and increasing consumer awareness about environmental sustainability. Sales nearly doubled in 2023 and are expected to climb another 66% this year, according to Counterpoint research. This surge is placing India among the world’s fastest-growing EV markets.

The overall sales of electric passenger vehicles increased to 90,996 units in FY 24 from only 47,551 units in FY 23. 

Similarly, the electric vehicle two-wheeler segment witnessed a growth of 30% YoY. The registration of electric two-wheelers increased to 9,47,087 units in FY 24 from 7,28,205 units in FY 23.

As per this report published by Statista, post Covid-19, the EV sales growth has spiked significantly, especially the two-wheeler segment, which is leading the overall growth of the EV industry in India. 

Government Policies Boosting EV Sales

Government subsidy schemes like FAME-II offer financial incentives to EV manufacturers and buyers, making EVs more affordable. The FAME II scheme, with a budget outlay of Rs 10,000 crore, was introduced in 2019 for a period of three years, which ended in March 2024. This triggered a setback for the overall growth of the EV industry in India. However, the Centre has reportedly extended its FAME-II scheme by four months to avoid any disruption in the EV industry and allocated Rs 500 crore to cover subsidies for demand incentives for e2W and e3Ws until July 31, 2024.

Factors Influencing Auto Sales in India

The two major factors that are influencing the auto sales in India are as follows:

Economic Factors and Consumer Spending

• Economic growth and disposable income: A strong economy with rising disposable income puts more money in people’s pockets, allowing them to afford car purchases. Conversely, economic downturns can significantly dampen sales.
• Interest rates: Low-interest rates make car loans more affordable, stimulating demand. Higher rates have the opposite effect.
• Fuel prices: Rising fuel costs can incentivize consumers to shift towards more fuel-efficient vehicles or even EVs.

Technological Advancements and Their Impact

• Fuel efficiency and alternative fuel options: Advancements in engine technology and the growing popularity of EVs are giving buyers more fuel-efficient options, reducing running costs and environmental impact.
• Safety features: Increasing integration of advanced safety features like airbags, ABS, and electronic stability control makes cars more appealing to safety-conscious buyers.
• Connectivity and convenience features: Features like touchscreen infotainment systems, navigation, and connected car technology enhance the driving experience and attract tech-savvy consumers.

Future Trends in the Indian Auto Market

Here’s a glimpse into emerging market trends in the automobile industry based on current data:

• Surge in Electric Vehicles (EVs):  Fueled by government incentives, dropping battery prices, and rising environmental concerns, EV sales are expected to soar in emerging markets like India.
• Focus on affordability:  As a cost-conscious demographic dominates emerging markets, carmakers will prioritize developing and offering budget-friendly EVs alongside premium models.
• Rise of Mobility-as-a-Service (MaaS):  Car ownership might decline in favour of convenient and economical MaaS options like ride-hailing and car-sharing, especially in densely populated cities.
• Shared electrification:  With MaaS gaining traction, fleet electrification is likely to become a priority for ride-hailing and car-sharing companies to reduce operational costs and environmental impact.
• Two-wheeler electrification:  The two-wheeler segment is expected to be a major driver of EV growth in emerging markets due to lower upfront costs and government initiatives promoting clean transportation.

Conclusion

In conclusion, India’s auto industry is experiencing a resurgence fueled by a rise in disposable income, technological advancements, and a growing preference for EVs. The future looks bright with increasing EV adoption, a focus on safety and connectivity, and the potential for disruptive mobility solutions. This sector is poised to be a key driver of India’s economic growth in the years to come. 

Now, that you have a deep understanding of analyzing the auto sales data, here is another blog which may enlighten you about the Indian aviation sector and the investment opportunities in it.

Happy Investing!