Passenger vehicle sales drop for 2 festive seasons in a row

NEW DELHI: If you thought the slump in auto sales during the festive season last year was bad enough, think again as the fall has only worsened this year. Last year’s festive sales were the worst in nearly five years as customers felt the pinch of a slowing Indian economy.

According to the latest data from the Federation of Automobile Dealers Association (FADA), during the 42-day festivals this year, retail sales of vehicles across categories fell 2% year-onyear (y-o-y) to 2.41 million units.

Festive season retail performance is crucial for the domestic industry since it comprises a third of annual sales.

According to FADA, festive season starts from the first day of Navratri and ends after two weeks with Diwali.

“The discounts this festive season have been more than last year to bring both footfalls back and clear out BS-IV stocks. An overall flat trend implies that we are still not out of the woods,” said Avik Chattopadhyay, co-founder at Expereal, a brand and business strategy firm.

Among the worst performers were motorcycles and scooters, wherein the combined sales fell 2% y-o-y to nearly 1.9 million units. Cars and utility vehicles fared better notching a 1% increase to 343,000 units.

However, commercial vehicle sales, which are often seen as a barometer of economic growth, crashed 18% from the year earlier. This was partly due to an increase in the freight carrying capacity or cargo loads allowed on vehicles by the centre.

In October, retail sales of passenger vehicles increased by 11% y-o-y to 248,036 units, but the rebound came as there were two important festivals—navratri and Diwali—during the month compared to only Navratri last year. Demand was also buttressed by significant discounts offered by vehicle manufacturers, desperate to reduce their inventory.

Ashish Kale, president, FADA, said there were nascent signs of demand improving in the coming months, but industry players should still “tread with caution due to overall weak economic situation”. He was hopeful that recent policy measures would lead to strengthening of demand in tandem with better economic performance.

A recent bright spot has been a reduction in inventory of all vehicles at dealerships.

FADA’S survey showed that at the end of October, inventory of passenger vehicles at dealerships reduced from 30-35 days in September to 25-30 days.

Two-wheelers saw similar month-on-month reduction from 60-65 days to 35-40 days, while stocks of commercial vehicles fell from 60-65 days to 40-45 days.