Automobile retail sales in December slid 12% year-on-year (y-o-y) and 45.26% month-on-month (m-o-m), according to retail data released by The Federation of Automobile Dealers Associations (FADA), indicating a demand crunch in a slowing economy.
All categories except tractors witnessed contraction with two-wheelers (2W), three-wheelers (3W), passenger vehicles (PV) and commercial vehicles (CV) falling by 17.6%, 4.5%, 2% and 5.2% y-o-y respectively. Tractors, on the other hand, registered a notably contrasting 25.7% y-o-y growth.
The 2W segment which suffered a substantial drop of 17.6% y-o-y and 54.2% m-o-m was impacted by delayed crop payments, halted government disbursements and typical year-end factors, FADA said citing dealers’ feedback.
Supply challenges for popular models and the growing push toward EVs further weighed on volumes, it said.
PV retail sales declined by 1.9% yoy and 8.8% m-o-m, primarily due to high inventory levels following the festive season and aggressive discounting aimed at clearing stock, said C. S. Vigneshwar, president, FADA.
“Poor market sentiment, limited new model launches and intense price competition among co-dealers further impacted sales,” he said adding inventory levels have now come down to 55 and 60 days.
CV retails declined by 5.2% yoy and 12.1% m-o-m due to low market sentiment, delayed government fund releases and slow financing approvals, the FADA President said adding many customers postponed purchases, preferring 2025 models.
But despite multiple headwinds like heatwaves, elections and uneven monsoon, auto retail sales grew by 9% in CY2024 over the previous year.
While 2W, 3W, PV and tractor segments grew by 10.78%, 10%, 5% and 2.5% y-o-y respectively, CV retail sales stayed almost unchanged at 0.07% y-o-y.
“The 3W, PV and tractor segments touched new all-time highs and 2W barely missed surpassing its CY18 peak. CV is also yet to reach its CY18 peak, a year which saw the introduction of axle load norms,” Mr. Vigneshwar said.
While the 2W segment benefitted through improved supply, introduction of fresh models and strong rural demand propelling growth, the PV segment benefited from network expansion and product launches. However, dealers of this segment faced margin pressures due to higher inventory thus leading to “discount war towards the second half”.
Looking ahead, auto dealers’ sentiment for January remains cautiously optimistic, with nearly half (48.09%) of surveyed dealers anticipating growth, 41.22% expecting stable demand and only 10.69% foreseeing a decline.
“Overall, despite certain headwinds, auto dealers remain hopeful that steady product availability, strategic marketing and supportive government measures will sustain momentum in the near term. However, PV OEMs must carefully manage their supplies in line with market demand,.” Mr. Vigneshwar emphasized.
Published – January 07, 2025 10:55 pm IST
