Auto retail sales dip 12% in December despite a good show in CY 2024

Sales of two wheelers dipped by 18 per cent, passenger vehicles by 2 per cent and commercial vehicles (CV) by 5.2 per cent

Despite 2024 seeing the highest-ever automobile retail sales with a 9 per cent growth compared to 2023, December played spoilsport for the sector with total retail sales declining by 12 per cent compared to the corresponding period last year.

 

All categories except tractors witnessed degrowth, with sales of two wheelers dipping by 18 per cent, passenger vehicles by 2 per cent, commercial vehicles (CV) by 5.2 per cent and three wheelers by 4.5 per cent, data shared by the Federation of Automobile Dealers Associations (FADA) stated.

 

Dealers cited low cash flow and poor market sentiment— exacerbated by delayed crop payments, halted government disbursements and typical year-end factors— as the main reasons for the decline.

   

Supply challenges for popular models and the growing push toward EVs further weighed on volumes in two wheelers. Tractors, on the other hand, registered a notably contrasting 25.7 per cent year-on-year (Y-o-Y) growth.  For 2024, the highest-ever overall retail sales touched 26.1 million, up 9 per cent from 23.9 million in 2023, with two wheelers posting 11 per cent increase, followed by three wheelers with 10.5 per cent, passenger vehicles with 5 per cent, tractors with 3 per cent and commercial vehicles with a marginal 0.07 per cent increase. Two wheelers barely missed surpassing its 2018 peak, while commercial vehicles are also yet to reach its 2018 peak, a year which saw the introduction of axle load norms. 

 

“Rural market was not doing badly during the month. Tractor sales are a sign of that. We believe that money may not have reached farmers yet, in addition to issues with regards to credit availability. Normally, last week of December sees a pick-up in sales by 50 per cent, which did not happen this year. Hence, we believe that buyers might have postponed their plans and January may see improved sales,” said C S Vigneshwar, president of FADA. Retail sales in December were seen at 1.75 million, versus 20.07 million in December 2023.

 

One major positive in the passenger vehicle segment was inventory levels that declined to 55 to 60 days during the month. Many dealers also mentioned that heightened discounts and limited financing options failed to offset weak demand.

 

Passenger vehicle retails declined by 1.9 per cent Y-o-Y and 8.8 per cent month-on-month (M-o-M), primarily due to high inventory levels following the festive season and aggressive discounting aimed at clearing stock.

 

“Poor market sentiment, limited new model launches and intense price competition among co-dealers further impacted sales. While some dealers benefited from year-end schemes and expanded product ranges, overall demand remained subdued, with many customers deferring purchases to January for anticipated benefits,” he added. Among the major players, market leader Maruti Suzuki saw a 3 per cent dip, while Hyundai by 2 per cent, Tata Motors by 15 per cent, and Mahindra and Mahindra by 9.5 per cent. However, Toyota Kirloskar witnessed a 29 per cent rise in sales to 19,392 units.

 

The two-wheeler segment suffered a substantial drop of 17.6 per cent Y-o-Y and 54.2 per cent M-o-M. CV retails declined by 5.2 per cent Y-o-Y and 12.1 per cent M-o-M due to low market sentiment, delayed government fund releases and slow financing approvals. Many customers postponed purchases, preferring 2025 models.

 

“While some segments, such as tippers, demonstrated resilience, ongoing LCV degrowth and unseasonal rains further dampened demand. Although year-end schemes and inquiries offered limited relief, overall sales remained under pressure,” he added.