In India, automobile sales dropped by 9.26% in September compared to the same month last year. The decline in sales is due to an accumulation of passenger vehicles, mainly because the demand has been weak. The Federation of Automobile Dealers Associations has called upon original equipment manufacturers to implement strategies that will address this urgent issue.
1. FADA’s call for action from OEMs
FADA recently released a statement highlighting the fragile situation created by the high inventory levels within the PV sector. Dealers and OEMs would be affected if October’s sales fell short of expectations. A lack of sales during the holiday season could result in significant discounts and promotional offers, which would potentially undermine the profitability of dealerships across the country.
2. Take urgent measures before the festive season
FADA, in light of the impending festive season, has urged OEMs to take immediate corrective measures to avoid a financial crisis. The FADA has also asked the Reserve Bank of India to provide guidance to banks to encourage them to adopt stricter financing policies that are solely based on dealer consent and tangible security. The move is intended to protect dealers from financial stress due to unsold stock. FADA stresses that now is the time for PV OEMs and their suppliers to re-evaluate their strategies in order to boost market recovery.
3. October Sales are Important for Dealers and Manufacturers
The festive season is a great opportunity to recover, but stakes are high in October. Dealers and OEMs must prioritize clearing out existing inventory. The apex auto dealer body says that effective inventory management combined with targeted festive promotional campaigns will be crucial in harnessing the anticipated demand surge and stabilizing market conditions.
4. Trends in September Vehicle Registration
In September, the total number of vehicle registrations dropped by 9.23%. This is compared to 18.99 million units in the same month a year ago. The majority of segments, such as passenger vehicles (PVs), and two-wheelers (2Ws), saw a decline year-over-year. Only three-wheelers (3Ws), tractors, and passenger vehicles (PVs) bucked this trend with growths of 0.66%, 14.69% and respectively. According to FADA, the two-wheelers (PVs), passenger cars, and commercial vehicles all saw significant declines of 8.51 %, 18.81% %, and 10.45 % year-on-year.
5. Performance of Passenger Cars
CS Vigneshwar stated that the performance of dealers has stagnated, despite festive occasions such as Ganesh Chaturthi or Onam. According to FADA, retail sales of passenger vehicles in India fell by 18.81% on an annual basis in September. This trend highlights a worrying trend of declining consumer confidence and waning demand. The crisis has been exacerbated by seasonal influences such as shraddh, pitrapaksha and persistent heavy rains, in combination with a slow economy. Dealers are now facing record inventory levels, which range from 80 to 85-days–equivalent to 7,9 lakh vehicles worth Rs79,000 crore.
6. Stasis in two-wheeler sales
Sales of two-wheelers fell 8.5% in September compared to the same period last year, from 13.16 millions to 12.04million. This can be attributed a sluggish customer sentiment, weak inquiries and fewer walk ins. According to FADA, seasonal factors like the pitrapaksha period, shraddh, and heavy rains further dampened demand. This led to postponed sales and a subdued atmosphere on the market.
7. Three-Wheeler sales are on the rise
Sales of three-wheelers (3W) increased by 0.66% compared to the same period last year, with 106,524 versus 105,827. This growth was driven by increased customer engagement and a growing demand for erickshaws. The apex auto dealer body noted, however, that the overall demand was still low, with many consumers delaying purchases to prepare for the festive season and heavy rains hampering walk-ins.
8. Commercial Vehicle Sales: Challenges and Opportunities
Sales of commercial vehicles (CVs) fell 10.45% on an annual basis, from 82.993 units to 74.324, indicating mixed performance. While certain regions benefited from a positive sentiment and a slight growth fueled by infrastructure projects. Overall demand remained sluggish because of low government spending, extended monsoon delays and seasonal challenges. FADA reported that although fleet purchases have increased modestly, market conditions remain subdued.
9. Market recovery and festive sales outlook
Mr. Vigneshwar expressed that the outcome is uncertain, as OEMs and dealers place their hopes in strong festive sales. This is especially true for rural markets, where better cash flow and favorable conditions for agriculture are expected to drive demand. He said, “A successful month is critical for clearing excess inventories and setting a positive growth path for the rest of FY24-25.”
10. High stakes for October, and Future Prospects
The outlook is bright, but the high stakes involved and the reliance on the performance of October require a cautious approach. If the anticipated sales do not materialize, sentiments could quickly turn pessimistic. This would place both OEMs and dealers in a difficult position as the new year approaches.
Frequently Ask Question –
Qus -Why are auto sales falling?
Ans- Retail sales of passenger vehicles fell sharply in September by 19%, due mainly to seasonal factors like heavy rain and ‘Pitru Paksha or ‘Sharadha – a 16 day lunar period during which many people avoid buying a new product.
Qus- What is the forecast for automobile sales in India?
Ans- The unit sales for the Passenger Cars Market are projected to reach 3208.00k cars by 2028. The volume-weighted price of Passenger Cars in India in 2024 is expected to be US$7.32k.
Qus- What is the total sales of cars in India?
Ans- Sales of Passenger Cars also increased from 14,67,039 to 17,47,376, Utility Vehicles from 14,89,219 to 20,03,718 and Vans 1,13,265 to 1,39,020 units, in FY-2022-23, compared to the previous year. The overall Commercial Vehicles sales increased from 7,16,566 to 9,62,468 units.
Qus- What is automobile sales?
Ans- Automobile sales is an enterprise that sells new or used automobiles . As an ancillary business, automobile repair is permitted.