Auto sales rise on the back of festive demand, discounts

Car sales in top gear:  The ongoing festive season and discounts offered by car makers are now reviving the customer sentiment in the automobile industry, which was dampened in August due to 1.8 per cent dip in sales of passenger vehicles (PVs), as per the industry body Federation of Automobile Dealers (FADA).   

FADA President CS Vigneshwar told Republic Business that a current spurt in sales is owing to a pent-up demand due to weak sales in the first five months of the year due to general elections and weather disruptions.

Notably, Maruti Suzuki reported a 10 per cent increase in bookings in Kerala before Onam festivities kickstarted, and deliveries in Maharashtra and Karnataka gained pace during Ganesh Chaturthi, as per an industry report.

Meanwhile, two-wheeler sales grew by 15-16 per cent during Onam. The two-wheeler and three-wheeler segments had shown  considerable growth in August as well. While the festive season boost in auto sales has been led by  Ganesh Chaturthi and Onam, Navratri, which falls in October, is also expected to boost sales, particularly in urban areas. 

However, as per FADA, the dampener has come in the form of continued heavy rains in September, which could damage crops and weaken rural purchasing power. 

Besides, the Shraddh period, an inauspicious time for purchases, is expected to pause PV sales in September. As per FADA, in terms of the dealer challenges, high inventory levels, aggressive discounting practices, and weak market sentiment continue to pressure dealer profitability. 

FADA outlook

Despite the festive expectations, FADA has remained cautiously optimistic about the near-term outlook of automobile sales.  “While the festive season and improved rural demand present promising opportunities for growth, ongoing weather uncertainties and high inventory levels may temper the overall recovery,” the FADA outlook added. 

To navigate these challenges, strategic inventory management and targeted marketing initiatives will be crucial in maximising festive sales and mitigating risks from adverse weather conditions, the FADA outlook further said. 

SIAM upbeat on sales  

As per industry data from the Society of Indian Automobile Manufacturers (SIAM), brisk car sales in successive months of the first quarter of the current financial year (Q1FY25) led to 16.4 per cent growth , with the sales of over 64 lakh units. 

Even as the auto industry is upbeat on festive sales, the month of August 2024, in terms of the passenger vehicle (PV) segment registered a degrowth of 1.8 per cent compared to August 2023, posting sales of around 3.53 lakh units. 

Three-wheelers posted sales of 0.7 lakh units in August 2024, a growth of 7.7 per cent from the previous peak of August 2023. The two-wheeler segment also posted a decent growth of 9.3 per cent in August 2024 as compared to August 2023, with sales of 17.12 lakh units. 

Rajesh Menon, Director General, SIAM says demand for vehicles is expected to grow during the festive season. Favourable rainfall in some regions has improved agricultural prospects, which may boost rural sales post-monsoon, added Menon.