Car Sales

India’s Car Market Faces 14% Drop in November Due to High Inventory and Low Demand

 

The Indian car market faced its toughest November, and the segment of passenger vehicles dipped sharply by 14% from the same period last year. The festive buzz in October, in which vehicle delivery picked up, left hardly any residual momentum for November sales. These factors added further pressure to dealers and manufacturers alike, against weak demand, limited new car launches, and higher inventory levels.

Retail data from the Federation of Automobile Dealers Associations (FADA) revealed that passenger vehicle registrations declined to 275,681 units. This is in keeping with the trend of slowing down sales in the previous months, with a 19% decline in September, and moderate declines in August and June. Dealers said the demand during the ongoing wedding season also fell short of expectations.

Passenger vehicles are still the laggard, while two-wheeler sales have been the darling with an increase of 16% in the period. The festive season spillover and rural demand are also perceived to be contributing to the number. The tractor sales also have been nearly 30%. But it is not the same story with the commercial vehicles, which took a hit of 6% year-on-year.

 

Urban vs. Rural Demand

 

The urban areas felt the most pain from the slowdown since consumer sentiment in big cities had weakened. Rural areas somewhat provided some comfort since they were supported by improved expectations over the harvest and increased disposable income. It was still not sufficient, however, to pull the economy out of its slump.

 

Inventory Woes and Industry Challenges

 

Dealership inventory levels were still at 65 to 68 days above the ideal range. FADA pleaded with the automobile manufacturers to address the issue by proper management of production and stock before the end of the year.

 

Looking Ahead

 

December is usually a slow month for car sales, primarily due to the hesitation of buyers at the tail-end of the year. However, the automakers are hoping that discounts and pre-January price hike offers will entice buyers. Industry players expect new launches like those on display at the Bharat Mobility Expo in January may help revive demand in 2025.