Passenger vehicle purchases have been hit by adverse weather conditions, tightened credit availability and a general economic slowdown leaving dealerships with piling stocks
Car sales have got off to a slow start this fiscal. As per data revealed by Federation of Automobile Dealers Association (FADA), there is unsold inventory of around 6 to 6.5 lakh units with an average ticket size of Rs 9.5 lakh and worth around Rs 60,000 crores.
This scenario has been evident over the past few months with the last 2 months stock at Rs 77,000 units. A similar scenario was reported in May 2024 when dealer inventory stood at 4 lakh cars worth Rs 44,000 crores.
Unsold Car Inventory – Hits Rs 60,000 Crores
The domestic passenger vehicle industry slowdown could be on account of several factors, among which environmental factors such as the heat wave which has hit the country. This is related to lower foot falls into company showrooms.
The general elections and stalled monsoons also related to lower sales while tightened credit from banks also brought about a devastating effect on the industry as a whole. These lower sales were despite most automakers introducing hefty discounts and exchange schemes each month since April 2024. These discounts were also offered on newly launched models and more particularly across SUVs, the latter of which normally sees high demand.
Passenger Vehicle Sales Slowdown
With the industry sitting on an inventory of 62-67 days, a large majority of automakers in India have seen sales dip in June 2024. Total wholesales saw a 4% growth in June 2024 to 3,41,000 units while actual vehicle registrations last month stood at 2,81,600 units, emphasizing the wide disparity between supplies by automakers and actual market demand.
Maruti Suzuki, the leading automaker in India has posted lower retail sales by 8% in the past month. The company advised its dealers to extend hefty discounts to customers and keep dealerships open for extended time each day, especially during the evening hours to draw in more buyers as temperatures were at an all-time high during the day.
PV Sales Decline in June 2024
Even as the passenger vehicle segment has been witnessing lower sales for the past few months, June 2024 saw PV sales decline by 6.77% YoY and by 7.18% MoM as per FADA release. Dealer feedback suggested 15% lower walk-ins and postponement of purchase decisions. Maruti, Hyundai and Tata Motors reported lower YoY sales.
However sales of Mahindra improved thanks to the new XUV3XO being well received while Toyota also showed off improved retail sales in June 2024. Retail sales also fell for Kia India, Skoda and Honda while MG Motor and Renault also suffered lower retail sales. This de-growth was also evident across some brands in the luxury car segment.
