Friday, May 24

Indian Automobile Retail Sales Experience 8% Decline in October: Industry Reports

With passenger vehicle inventory levels reaching an unprecedented high of 63-66 days, the Federation of Automobile Dealers Associations (FADA) has raised concerns about dealership capacities. The soaring inventory indicates a significant backlog of unsold vehicles, putting pressure on dealerships to accommodate the excess stock. This surplus raises challenges related to storage, maintenance, and financial implications for dealers. FADA’s statement highlights the urgency for manufacturers and dealers to collaborate effectively, devising strategies to streamline production and sales processes to address this critical issue.

In the festive month of October, retail vehicle sales in India witnessed an 8% year-on-year decline, as reported by the Federation of Automobile Dealers Associations (FADA) on November 6. The initial half of October 2023, marked by the Shraddh period characterized by reduced consumer spending, recorded an 8% YoY drop in vehicle sales, which likely impacted the overall monthly figures negatively.

 

Indian Automobile Retail Sales Experience 8% Decline in October
Indian Automobile Retail Sales Experience 8% Decline in October

 

However, on a month-on-month basis, automobile sales showed a positive trend, rising by 12.5%, especially due to the ongoing festive season. During this period, all automotive categories experienced growth. Two-wheelers (2W), three-wheelers (3W), passenger vehicles (PV), tractors (Trac), and commercial vehicles (CV) saw an increase of 15%, 2%, 7%, 15%, and 10%, respectively, compared to the previous month, as per FADA data. Notably, during Navratri days, except for tractors, all categories observed gains. Two-wheelers, three-wheelers, commercial vehicles, and passenger vehicles grew by 22%, 43%, 9%, and 6.5%, respectively, while tractors faced an 8% decline in sales.

FADA President, Manish Raj Singhania, commented on the situation, acknowledging the impact of the inauspicious Shraddh period on YoY comparisons. He emphasized that despite this, the auto retail sector experienced significant growth when compared month-on-month, with all categories contributing positively. Singhania also highlighted concerns regarding the rising inventory levels of passenger vehicles, reaching an alarming 63-66 days range, signaling potential capacity issues at dealerships.

FADA has issued a red flag, urging manufacturers to moderate vehicle dispatches and introduce more aggressive and attractive schemes promptly. This dual approach is essential to help dealers clear their inventory before the year-end, avoiding financial repercussions associated with excess unsold stock, as per FADA’s recommendation.

Looking ahead, FADA provided a mixed outlook for the auto sector approaching year-end. While festivities and the harvest season are expected to boost two-wheeler sales, the passenger vehicle segment faces challenges. Although festive days might lead to increased bookings, the looming year-end discounts could impact immediate sales negatively. FADA emphasized the urgency for manufacturers to address the high inventory levels in passenger vehicles, emphasizing the need for immediate and decisive action to prevent potential industry-wide repercussions and financial strain on dealers as the year concludes.


Also read: Hyundai Motor India Posts Strong Performance in October

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