Passenger vehicle sales slide in November as stock pile-up in showrooms persists
- Overall retail sales of vehicles across categories rose more than 11% to 32,08,719 units in November, from 28,85,317 units a year ago, lifted by a near 16% increase in two-wheeler sales, FADA said in a statement.
New Delhi: Retail sales of passenger vehicles fell 13.72% year-on-year in November, reflecting subdued post-festive demand and lingering inventory challenges, according to data released by the Federation of Automobile Dealers Associations (FADA) on Monday.
Passenger vehicle registrations dropped to 3,21,943 units in November, from 4,83,159 units in October, marking a steep 33% decline month-on-month as well.
Overall retail sales of vehicles across categories rose more than 11% to 32,08,719 units in November, from 28,85,317 units a year ago, lifted by a near 16% increase in two-wheeler sales, FADA said in a statement.
A rush of festivals in October and Diwali, an auspicious occasion for high-value purchases, falling on 1 November meant that consumers advanced their purchases, pulling the auto sales figures down for the month. A strong wedding season, which begins soon after the festivals, also failed to bring much cheer to the car retailers. While rural demand offered a glimmer of support, it wasn’t enough to offset sluggish sales in urban markets.
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“Inventory levels have come down by around 10 days since October, but they remain uncomfortably high at 65 to 68 days,” said C.S. Vigneshwar, president, FADA, said in the statement.
“The industry started October with over 85 days of inventory. Though there’s been some reduction, many dealers still carry 40 to 50 days of stock. OEMs (original equipment manufacturers) need to cut dispatches more aggressively," he added.
Inventory correction falls short
Manufacturers have been trimming dispatches to align supplies with demand, but the adjustment has been insufficient. The inventory pain has also spread to the SUV segment, which accounts for one in every two passenger vehicles sold in India.
The entry-level segment, meanwhile, is grappling with competition from a surprising source—used cars. Vigneshwar said robust four-year-old used vehicles in excellent condition are pulling customers away from smaller, budget-friendly new cars. Rising vehicle prices, which have surged by nearly 40% since 2020, have further dampened demand for entry-level models.
Price hike puzzle
Adding to the uncertainty is the announcement of price hikes by automakers, set to take effect in January. These adjustments, typically driven by input cost inflation, are expected to encourage some pre-hike purchases in December. However, it's likely to worsen demand in January, given the current glut of inventory and subdued market sentiment.
Also read | Indian automakers shift gears: Affordable, not premium cars in focus
Rural outshines urban
The retail vehicle data for November 2024 highlights a sharp contrast between urban and rural demand. In the two-wheeler (2W) segment, rural markets displayed a significant surge, with a 19.93% year-on-year (y-o-y) growth compared to 9.08% in urban areas. On a month-on-month (m-o-m) basis, rural 2W sales skyrocketed by 46.4%, far outpacing the modest 2.05% growth in urban markets. This rural momentum is mirrored in passenger vehicles sales as well, which rose 16.53%, compared to a modest 3.66% growth in urban centers. Rural sales of passenger vehicles also leapt 31.77% sequentially, contrasting sharply with the urban market's 34.87% decline, driven by festival season demand and agricultural income cycles.
During April–November, sales of two-wheeler and passenger vehicles rose 15.4% and 13%, respectively, in rural areas, compared with 11.56% and 7.36% growth in urban centres. In commercial vehicles (CV) and tractors, rural demand showed resilience, maintaining positive or stable trends compared to urban markets, which saw declines in both segments.
Cautious outlook ahead
As the year draws to a close, December could see some recovery, driven by aggressive discounts and end-of-year promotional activity. However, the outlook remains mixed. Dealers report that while some customers are delaying purchases for new-year models, others may act to take advantage of offers before prices rise in January.
Also read | India steps up push for ethanol as fuel, automakers seek differential pricing
“Consumer sentiment will hinge on broader economic factors, including inflation and rural income. With a bumper Kharif harvest expected to temper food inflation, the macroeconomic outlook could improve, but immediate gains may be limited,” FADA said in its release.
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Business NewsAuto NewsPassenger vehicle sales slide in November as stock pile-up in showrooms persists
First Published:9 Dec 2024, 08:33 PM IST
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