Even though car sales in 2024 reached their highest point ever, up 9% from 2023, December was a disaster for the industry, as total retail sales fell 12% from the same period the previous year.
Sales of two-wheelers fell by 18%, passenger cars by 2%, commercial vehicles (CV) by 5.2%, and three-wheelers by 4.5%, according to figures released by the Federation of Automobile Dealers Associations (FADA). This degrowth was observed in all categories except tractors. The primary causes of the fall, according to dealers, were low cash flow and negative market mood, which were made worse by postponed agricultural payments, suspended government payouts, and normal year-end issues.
The growing trend toward electric vehicles and supply issues for popular models also affected two-wheeler numbers. Conversely, tractors saw a strikingly different 25.7% year-over-year (Y-o-Y) rise. The highest-ever total retail sales for 2024 were 26.1 million, up 9% from 23.9 million in 2023. Two-wheelers narrowly missed out on topping their 2018 record, while commercial vehicles have yet to reach their 2018 peak, which coincided with the introduction of axle load norms.
"The rural market performed well during the month. Tractor sales are an indicator of this. We believe that money has not yet reached farmers, and there are concerns with credit availability. Sales often increase by 50% in the last week of December, but this did not occur this year. As a result, we believe that customers have postponed their plans, and that sales will improve in January," said C S Vigneshwar, President at FADA. Retail sales in December were estimated at 1.75 million, compared to 20.07 million in December 2023.
One significant positive in the passenger vehicle market was a decrease in inventory levels to 55 to 60 days during the month. Many dealers also stated that increased discounts and restricted financing choices were insufficient to counter lackluster demand. Passenger vehicle retail sales fell by 1.9% year on year and 8.8% month on month, owing mostly to high inventory levels following the festive season and aggressive discounting aimed at clearing stock.
"Poor market attitude, limited new model introductions, and severe pricing competition among co-dealers all weighed on sales. While some dealers profited from year-end promotions and extended product lines, overall demand remained low, with many customers postponing purchases until January for anticipated benefits," he said. Among the main players, market leader Maruti Suzuki fell 3%, Hyundai by 2%, Tata Motors by 15%, and Mahindra & Mahindra by 9.5%. However, Toyota Kirloskar saw a 29% increase in sales to 19,392 vehicles.
The two-wheeler segment experienced a significant loss of 17.6 percent year on year and 54.2 percent month on month. CV retail sales fell by 5.2 percent year on year and 12.1 percent month on month due to negative market mood, delayed government fund disbursements, and tardy financing approvals. Many customers postponed purchasing, preferring 2025 models.
"While some segments, such as tippers, showed resilience, continued LCV degrowth and unseasonal rainfall impacted demand. Although year-end promotions and inquiries provided some assistance, overall sales remained under pressure," he said.
