The Indian passenger vehicle market is witnessing a notable slowdown in December, with automakers reportedly making a sharp correction in dispatches to dealers. Industry estimates suggest that December sales are expected to fall within the range of 275,000-280,000 units, marking the first time in 2023 that monthly volume is projected to drop below 300,000 units.
Factors contributing to this decline include a post-festive easing of demand and the impact of a high base from the previous year. In the first eleven months of 2023, the average monthly volume stood at 345,000 units. The month-on-month comparison for December indicates an estimated contraction of 55,000 units, representing the highest absolute decline in the last two decades, excluding December 2021.
While December typically sees weaker sales as buyers await the new year for model change benefits, this month is expected to be an outlier. Dealerships have reported high stock levels, with around 330,000 units at the beginning of December. Industry focus is shifting toward retails, with expectations that wholesales in December will be muted.
Shashank Srivastava, Senior Executive Officer, Sales and Marketing at Maruti Suzuki India, emphasized the importance of reducing stock levels in December, aiming for a balance between wholesale and retail. Industry experts anticipate a correction in stock levels by the end of December.
Manish Raj Singhania, President of the Federation of Automobile Dealers Association (FADA), expressed concerns about elevated stock levels, equivalent to over 60 days of sales. FADA has urged industry bodies and financiers to consider the existing stock levels and avoid overburdening dealers.
Tarun Garg, Chief Operating Officer at Hyundai Motor India, expects December sales to be around 287,000 units, with Hyundai performing well. He notes a healthy state of network stock as the industry enters 2024.
Despite heavy discounts, the reduction in-stock may not exceed 70,000-80,000 units, according to Singhania. The three-month rolling passenger vehicle sales during the festive season reached close to 1.1 million in November. The contribution of December volumes to total annual sales may drop to 6.8%, the lowest since December 2008.
