New Delhi: Auto makers in India cut production and dispatches of passenger vehicles in December to adjust rising unsold stocks at dealerships.

Wholesales, or factory dispatches to dealerships, fell 0.43% from the year earlier to 238,692 units last month, showed data issued Monday by the Society of Indian Automobile Manufacturers (Siam). Automobile sales in India are counted as factory dispatches and not retail sales.

Car sales fell 2% in December to 155,159 units while utility vehicles saw a 2.3% drop to 65,506 units. Sales of vans however rose 26% to 18,027 units. Retail sales of automobiles have been subdued since August due to worsening macro-economic factors. The dealerships however expanded their inventory hoping demand would revive due to the festival season.

Rajan Wadhera, president, Siam, said sales were weak as companies went slow on supplies to dealers who were already struggling with rising inventory after a subdued festival season due to higher fuel prices and a credit squeeze following liquidity crisis in non-banking financial companies (NBFCs).

“The third quarter has not been good for vehicle sales since we didn’t see customers coming to the showrooms. So, adjustments needed to be done. However, retail sales have been good and the inventory level is now around 30-35 days which is substantially less," said Wadhera.

In commercial vehicles, the NBFC liquidity crisis continued to hit the availability of credit for fleet owners. Sales of medium and heavy trucks fell 21% in December to 31,299 units. The light commercial vehicle segment posted a slower 4.1% growth to 44,685 units. As a result, total commercial vehicle sales fell by 7.8% y-o-y to 75,984 units last month.

“The lack of credit from NBFCs hurt commercial vehicle sales but tipper sales have grown as construction has increased. We expect to grow in next fiscal year but it won’t be as good as last year. The availability of funds will impact growth," the Siam president said.

Siam, however, did not revise its sales growth projections—made earlier this fiscal—for any of the categories as sales are expected to remain subdued in the fourth quarter.

Lack of recovery in the rural markets and lower financing options led to a 0.6% rise in motorcycle sales to 793,061 units in December while scooter sales fell 6% year-on-year to 406,137 units. Overall sales of two-wheelers including mopeds fell 2.2% to nearly 1.26 million units the during the month

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