In the 42-day period spanning Navratri and Diwali, retail sales of vehicles fell 2% y-o-y to 2.41 million
In October, retail sales of PVs rose by 11% y-o-y to 248,036 units as both Navratri and Diwali fell in Oct
If you thought the slump in auto sales during the festive season last year was bad enough, think again as the fall has only worsened this year. Last year’s festive sales were the worst in nearly five years as customers felt the pinch of a slowing Indian economy.
Festive season retail performance is crucial for the domestic industry since it comprises a third of annual sales. According to FADA, festive season starts from the first day of Navratri and ends after two weeks with Diwali.
“The discounts this festive season have been more than last year to bring both footfalls back and clear out BS-IV stocks. An overall flat trend implies that we are still not out of the woods," said Avik Chattopadhyay, co-founder at Expereal, a brand and business strategy firm.
Among the worst performers were motorcycles and scooters, wherein the combined sales fell 2% y-o-y to nearly 1.9 million units. Cars and utility vehicles fared better notching a 1% increase to 343,000 units.
However, commercial vehicle sales, which are often seen as a barometer of economic growth, crashed 18% from the year earlier. This was partly due to an increase in the freight carrying capacity or cargo loads allowed on vehicles by the centre.
In October, retail sales of passenger vehicles increased by 11% y-o-y to 248,036 units, but the rebound came as there were two important festivals—Navratri and Diwali—during the month compared to only Navratri last year. Demand was also buttressed by significant discounts offered by vehicle manufacturers, desperate to reduce their inventory.
Ashish Kale, president, FADA, said there were nascent signs of demand improving in the coming months, but industry players should still “tread with caution due to overall weak economic situation". He was hopeful that recent policy measures, such as bank lending rate cut and lifting a freeze on government vehicle purchases, would lead to strengthening of demand in tandem with better economic performance.
A recent bright spot has been a reduction in inventory of all vehicles at dealerships. FADA’s survey showed that at the end of October, inventory of passenger vehicles at dealerships reduced from 30-35 days in September to 25-30 days. Two-wheelers saw similar month-on-month reduction from 60-65 days to 35-40 days, while stocks of commercial vehicles fell from 60-65 days to 40-45 days.
October two–wheeler sales increased by 5% to 1.33 million units, while three-wheelers recorded a 4% increase to 59,573 units. But sales of commercial vehicles remained a sore spot with sales falling 23% to 67,060 units.
According to the data released by the Society of Indian Automobile Manufacturers (Siam), domestic wholesales, or factory dispatches of passenger vehicles, increased by 0.28% y-o-y in October to 285,027 units, after eleven months of decline on the back of increased dispatches from market leader Maruti Suzuki India Ltd and the entry of new players—Kia Morors India Ltd and MG Motor India Ltd.
Sales of two-wheelers and commercial vehicles during the period declined by 12.76% and 23.31%, respectively.
Subdued sales of automobiles in two consecutive festive seasons underscore lack of overall economic activity. Moody’s Investors Service had recently downgraded India’s sovereign credit rating to negative from stable. Institutions, such as the Reserve Bank of India, and some credit rating firms have also downgraded the estimated growth in India’s gross domestic product, due to the prolonged slowdown.