September 2024 saw a 9.26 per cent decline in auto retail sales despite a 6.5 per cent growth in H1 FY2025. Passenger vehicles experienced an 18.8 per
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While the first half of FY2025 has observed an overall year-on-year growth of 6.5 per cent, auto retail sales in September have taken a hit, having witnessed an overall decline of 9.26 per cent. The Federation of Automobile Dealers Association (FADA) has released their report on vehicle retail sales in the month of September 2024, and findings state that four out of five vehicle segments in the country saw significant decline, with passenger vehicles getting the shortest end of the. stick.
September 2024 saw two-wheeler sales fall by 8.5 per cent YoY, while passenger vehicle retail faced a steep YoY decline of 18.8 per cent. FADA President, CS Vigneshwar, said dealers reported stagnant performance in spite of onset of festivals such as Onam and Ganesh Chaturthi. This, according to Vigneshwar, “suggests that overall market sentiment during these festive periods has been underwhelming, with a trend leaning towards flat or negative growth.”
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Vigneshwar further adds that additional seasonal factors such as the Shraddh period has, “impacted sales negatively, leading to a YoY decline in retail sales across various categories.” Although discounts and offers have been introduced across dealerships, these are yet to translate into significant sales. figures.
Seasonal factors and consumer sentiments:
Two-wheeler sales have declined by 8.5 per cent YoY over low consumer sentiment, poor enquiries, and reduced walk-ins. The segment saw sold of 1,33,978 units, less than it did in August, leading to a 10.5 per cent month-on-month decline. The winner here stands to be Honda Motorcycle & Scooter India, having outperformed Hero MotorCorp by nearly 62,670 units while reporting a 27.73 per cent market share. While some manufacturers such as Suzuki and Yamaha have observed a YoY sales growth, the market environment is largely subdued.
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The passenger vehicles segment reports the steepest decline in sales across all vehicle segments, having sold 63,862 total units less than September last year. The segment further reports a 10.8 per cent MoM decline in sales as well. Vigneshwar has red flagged this as “an alarming trend of declining consumer demand and deteriorating market sentiment.”
The FADA president further warns that the seasonal factors, heavy rainfall, and slowing economy that have caused this decline have left dealers with astronomically high levels of inventory, “equivalent to 7.9 lakh vehicles worth 79,000 crore.”
Reason for concerns and future outlook:
FADA is “cautiously optimistic” about auto retail. Navratri and Diwali being in the same month are expected to lead to stronger sales performance, and rural demand is expected to improve over increased crop yield due to the southwest monsoon season. While this creates a positive outlook for 2W sales, the report states that the PV segment “faces a critical situation due to high inventory levels at dealerships.”
FADA has urged the Reserve Bank of India to mandate “stricter channel funding policies based only on Dealer consent and on actual collateral, to prevent Dealers from facing additional financial pressure due to unsold stock.” The report maintains that the success of the festival season is going to be crucial in clearing out excess stock and setting a positive trajectory for sales growth in the future for the remainder of FY25.
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First Published Date: 08 Oct 2024, 17:35 PM IST
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