March car sales dip, signal muted FY25

Manufacturers may have to trim output to match lower demand

Car sales slowed in March as key festivals such as Navratri that boost purchases fall in April this year, apart from the high base effect of the last two years’ record sales.

The slowdown in March signals the beginning of a period of subdued passenger vehicle sales from the new fiscal year starting April, industry executives said, adding it may prompt automakers to lower production volumes to match the changed demand- supply dynamics.

The passenger vehicles industry is expected to report wholesales, that is, shipments to dealers, in the range of 370,000-375,000 units in March, with retail sales trailing that number and adding more stock to showrooms, said Shashank Srivastava, senior executive director, Maruti Suzuki.

By contrast, a little over 300,000 units with dealers are considered a normal stock level, equalling 30 days of sales, Srivastava said.

“However, the industry will have to be watchful because there will be no leeway to pump in vehicles in the event of a temporary slump in retail

BALANCING OUT

FY24 may see PV wholesales of 4.23 mn, retail sales of 4.21 mn

PRODUCTION adjustments by OEMs expected from Apr

sales and demand and supply will have to be carefully matched,” he cautioned. Total dealer dispatches for FY24 are expected to come in at 4.23 million units, with retail sales expected at 4.21 million, he added.

Production adjustments by original equipment manufacturers (OEMs) are expected from April,

STOCK levels across industry are reported normal or slightly high said Tarun Garg, chief operating officer of Hyundai Motor India, which makes models such as the Creta mid-SUV.

“March was a slow month in terms of retails, for three broad reasons”, he said. “Retail sales are influ

enced by the timing of auspicious and inauspicious periods in a month. Last year, Navratri fell between 22 March and 31 March, with the Gudi Padwa festival on 22 March. This year, these occasions have shifted to 9 April through 17 April.

“Historically, Navratri occurs in March 80% of the time. Additionally, the timing of Holi has also shifted, with it falling on 25 March this year compared to 8 March last year, which is preceded by an 8-day inauspicious period.

“These changes in festival timing contribute to variations in consumer behaviour, that’s one.

“The second point to note is that the industry witnessed a growth rate of 8% in the previous calendar year, compared to a robust 22% in the year before. Now, the high base effect is going to come into play, and we will head towards low single-digit growth for the current year. Lastly, stock levels across the industry are reported to be either normal or slightly higher. At Hyundai, because of our newlylaunched Creta, however, deliveries are ongoing and stock levels are only at three weeks,” Garg explained.

“It’s evident that we must adjust to the reality of singledigit growth now. This trend is expected to continue throughout the current calendar year, characterized by selective discounts, stable stock levels, and waiting periods for only a few models,” he added.

While the festival of Navratri shifting to April will likely bring some retail momentum, dealers reported tepid demand in March.

Retail sales for Maruti Suzuki and Toyota Kirloskar Motor are also being hurt by a shortage of CNG kits, impacting availability of those models, several dealers Mint spoke to said. Supplies of CNG models for other OEMs, including Hyundai and Tata Motors, on the other hand, remain normal.

“We saw a very lukewarm response from customers in the dealerships this month, unlike a typical March. There were not many new queries. Generally, the months of January and February are low in terms of volumes because they follow a month of high retail in December, and new, updated models for the new year start coming in only from the second week of January. February is a shorter month which also contributes to low retail,” R. Chandrashekhar, executive director of Mumbai-based auto dealership group Reliable Auto Pvt. Ltd said.

“March is generally a good month, but this year it’s been fairly similar to January and February.

“We expect sales to remain flattish in April and May, as customers are delaying purchases in the wake of the elections, and (in anticipation of) a possible GST reduction in the case of hybrids, among other factors,” he added.

Retail sales for Maruti Suzuki and Toyota Kirloskar Motor are also being hurt by a shortage of CNG kits