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According to FADA, the near-term outlook for automobile retail is cautiously optimistic. Photo: Bloomberg
Seasonal factors such as Shraddh and Pitrapaksha, coupled with heavy rainfall and a sluggish economy, dragged passenger vehicle retail sales down by 19 per cent in September. This led to historically high inventory levels for dealers, reaching 80-85 days—equivalent to 790,000 vehicles worth Rs 79,000 crore, said the Federation of Automobile Dealers Associations (FADA) in its monthly data on Monday.
With the critical festive season around the corner, FADA has urged original equipment manufacturers (OEMs) to take immediate corrective measures to avoid a financial setback. It also requested the Reserve Bank of India to issue an advisory to banks, mandating stricter channel funding policies based only on dealer consent and actual collateral, to prevent dealers from facing additional financial pressure due to unsold stock. “This is the final opportunity for OEMs to recalibrate and support market recovery before it’s too late,” said C S Vigneshwar, president of FADA.
Overall retail sales for September declined by 9.26 per cent, with all categories except three-wheelers and tractors showing a sharp decline compared to the same period last financial year. Two-wheelers and commercial vehicles dipped by 9 per cent and 10.45 per cent, respectively, alongside the significant decline in passenger vehicle sales. Three-wheelers saw an increase of 0.66 per cent, while tractor sales rose by 15 per cent during the month under review.
Among carmakers, Maruti Suzuki saw a 20 per cent drop in sales to 1,41,318, while Hyundai Motor India declined by 25 per cent, and Tata Motors by 19 per cent. Among the top four players, Mahindra and Mahindra saw a marginal rise of 0.4 per cent, surpassing Tata Motors as the number three player.
“Despite festivals like Ganesh Chaturthi and Onam, dealers have reported largely stagnant performance. This suggests that overall market sentiment during these festive periods has been underwhelming, with a trend towards flat or negative growth,” Vigneshwar said.
“The Shraddh period further impacted sales negatively, leading to a year-on-year decline in retail sales across various categories. Discounts and offers have been introduced across segments to stimulate demand, but these have yet to translate into a significant improvement in sales,” he added.
According to FADA, the near-term outlook for automobile retail is cautiously optimistic as both Navratri and Diwali fall in the same month, raising expectations for a surge in vehicle sales. “With healthy water levels in reservoirs and improved crop yields supporting rural demand, the festive season is expected to drive a substantial boost in two-wheeler, passenger vehicle, and tractor sales, with new launches planned for the month. However, the passenger vehicle segment faces a critical situation due to high inventory levels at dealerships,” Vigneshwar said.
If sales do not pick up as expected in October, dealers could face significant financial pressure from unsold stock piling up in their warehouses. While dealers and OEMs are betting on robust festive sales, especially in rural markets where positive cash flow and better agricultural conditions are expected to spur demand, the outcome remains uncertain, he said.
meta keywords: passenger vehicle sales, FADA, Shraddh, Pitrapaksha, September auto sales, OEMs, inventory levels, Federation of Automobile Dealers Associations, car sales decline, festive season sales, rural demand, Navratri, Diwali, tractor sales, Mahindra and Mahindra, Maruti Suzuki, Hyundai Motor India, Tata Motors, commercial vehicles, Reserve Bank of India
First Published: Oct 07 2024 | 10:33 AM IST
