Following a profitable festive season in October, automobile retail sales in November fell short of market forecasts, with an 11.2 percent increase over the same period last year, as marriage-related sales remained modest.
Around 4.8 million weddings were scheduled across India in November and December, which were projected to drive robust demand for two-wheelers and passenger vehicles (PV). However, PV sales fell by 14% in November, while two-wheeler sales rose by only 16%, falling short of market expectations. Apart from two-wheelers, three-wheelers and tractors also experienced strong increase throughout the month, at 4.23 percent and 29.88 percent, respectively. In contrast, commercial vehicle sales fell by 6%, according to monthly figures from the Federation of Automobile Dealers Associations (Fada).
Providing some respite to dealers, PV inventory levels fell by roughly 10 days but remained high at 65-68 days. Fada has urged original equipment manufacturers to further reduce inventory levels so that the sector can start the new year on a stronger foundation, avoiding the need for extra reductions.
"While November was expected to expand on its previous strength, particularly during the wedding season, dealer feedback suggests that this category failed overall expectations. Although rural markets provided some support, particularly for two-wheelers, marriage-related sales remained low. The late occurrence of Deepawali at the end of October resulted in a spillover of holiday registrations into November, hurting the month's sales trend," stated C S Vigneshwar, president of Fada.
The PV segment encountered considerable challenges, with monthly sales falling 33.37%. Dealers ascribed this to low market sentiment, little product variety, and insufficient new launches, which were exacerbated by the shift in festive demand to October. Although rural interest was apparent, it did not greatly improve sentiment.
The CV segment also underperformed, with monthly sales down 16%. Contributing factors were limited product options, older model issues, inadequate financial support, and the absence of large festivals in November following a good October. External variables such as elections, a downturn in the coal and cement industries, and negative market sentiment also had a significant impact on this category.
Except for Mahindra & Mahindra (up 2% compared to November 2023) and Toyota Kirloskar Motor (up 13%), sales of the top five companies in the PV market fell in November. Maruti Suzuki, the market leader, saw a 16% dip in sales, followed by Hyundai Motor India at 14% and Tata Motors at 23%.
"In the PV industry, strong discounts and increased product availability are likely to help counter low consumer sentiment and the overall year-end slump. While some customers are deferring purchases in favor of newer models, overall demand may increase due to enticing offers and end-of-year promotions. This sets a tone of cautious optimism, with a moderate possibility of increased sales over November," Vigneshwar remarked.
