India’s automobile industry experienced a sales downturn in September 2024, with a year-on-year decline of 9.26%, according to the Federation of Automobile Dealers Associations (FADA). The sector’s performance varied across different segments, with weak consumer sentiment and high inventory levels at dealerships contributing to lower sales in both the passenger vehicle and two-wheeler categories.
FADA President, C.S. Vigneshwar, noted that despite the challenges, the 2024 southwest monsoon recorded 8% above-normal rainfall—the highest in four years—leading to a 1.5% year-on-year increase in Kharif sowing. This boost in agricultural productivity has positively influenced rural demand and overall economic sentiment.
The Federation of Automotive Dealers (FADA) cited heavy rains and weak consumer sentiment as the major factors for the low demand for passenger vehicles and two-wheelers. The organisation, in its report, also said that Ganesh Chaturthi and Onam also failed to ignite demand for vehicles in the country in September this year.
The regulatory body also said that the period of Shraddh negatively impacted the sales of vehicles, resulting in a decline in various categories on a year-on-year basis.
The 2-wheeler sales declined by 10% MoM and 8.5% YoY due to low consumer sentiment, poor inquiries, and reduced walk-ins. Seasonal factors like the Shraddh period, Pitrapaksha, and heavy rains further impacted demand, resulting in delayed purchases and a subdued market environment.
The 3W sales showed marginal growth of 0.99% MoM and 0.66% YoY, driven by positive customer engagement and increasing demand for e-rickshaw options. However, overall demand remained subdued as many customers deferred purchases in anticipation of the upcoming festive season and heavy rains impacted walk-ins and sales activity.
The data released by FADA highlighted that the retail sales of the passenger vehicle segment also slumped and recorded a steep decline of 18.81 per cent on a year-on-year basis. “In the PV category, sales plummeted by 10.8 per cent month-on-month and 18.81 per cent year-on-year, signalling an alarming trend of declining consumer demand and deteriorating market sentiment,” the release said.
The commercial vehicle segment witnessed a marginal growth of 1.46 per cent on a month-on-month basis but saw a decline of 10.45 per cent on a year-on-year basis, showing a mixed performance. This pattern showcased subdued market conditions and weaker government spending. The release stated that, “While there was positive sentiment and marginal growth in regions supported by infrastructure projects, overall demand remained weak due to low government spending, extended monsoon delays, and seasonal challenges.”
The tractor segment and the three-wheeler segment sales saw a surge in demand. According to the data, there was a growth of 14.69 per cent on a year-on-year basis in the tractor segment and the three-wheeler segment witnessed a marginal growth of 0.66 per cent on a year-on-year basis. “The 3W sales showed marginal growth of 0.99 per cent MoM and 0.66 per cent YoY, driven by positive customer engagement and increasing demand for e-rickshaw options,” the release stated.
Near-Term Outlook The near-term outlook for Automobile Retail is cautiously optimistic as both Navratri and Diwali fall in the same month, creating strong expectations for a surge in vehicle sales. With healthy water levels in reservoirs and improved crop yields supporting rural demand, the festive season is expected to drive a substantial boost in 2W, PV, and Trac sales with new launches been planned for the month. However, the PV segment faces a critical situation due to high inventory levels at dealerships. If sales do not pick up as expected in October, Dealers could face significant financial pressure from unsold stock piling up in their warehouses.
While Dealers and OEMs are betting on robust festive sales, especially in rural markets where positive cash flow and better agricultural conditions are expected to spur demand, the outcome remains uncertain. A successful October is essential to clear out excess inventory and set a growth trajectory for the remainder of FY25. With rising inquiries and optimistic Dealer sentiments, the outlook leans towards optimism, but high stakes and dependency on October’s performance warrant a cautious approach. If the anticipated sales do not materialize, it could shift the outlook to pessimistic, putting Dealers as well as OEMs in a difficult position heading into the new year.