This year’s festival season marked a milestone, with retail automobile sales soaring 18 per cent year-on-year (y-o-y), surpassing the previous high during Navratri in 2017 across segments, said the Federation of Automobile Dealers Associations (FADA) on Monday, but it warned at the same time that inventory level is at the highest for passenger vehicles (PVs) at the moment.

“The PV segment is navigating a tricky phase. Festival days might spike bookings, yet the shadow of year-end discounts looms over immediate sales. High inventory levels in PVs, at a critical 63-66 days range, demand urgent attention from original equipment manufacturers (OEMs),” said Manish Raj Singhania, President, FADA, while sharing the monthly retail sales numbers.

dealer distress

He said without substantial interventions and Diwali sales fail to rise to the occasion, the weight of unsold stock could lead to significant dealer distress. Voicing FADA’s concerns for potential industry-wide repercussions, he said “immediate and decisive action” is imperative to counter the risk of a financial squeeze as the year closes.

“The near-term outlook for the auto sector is a blend of highs and lows, as it approaches year-end, but festivities, along with harvest season (especially paddy), are expected to boost two-wheeler (2W) sales, with optimism fuelled by new schemes and a push towards electrification, despite supply concerns,” he said.

Commercial vehicles (CVs) are looking at a strong November, with festival and construction activities enhancing demand, alongside anticipated financial schemes, said Singhania.

Talking about October sales, he said the PV segment navigated a complex landscape, marked by both enthusiasm and caution. During Navratri, despite regional variability, the industry witnessed a surge in bookings, buoyed by the introduction of compelling new models, particularly sports utility vehicles (SUVs) and the availability of attractive consumer offers.

During Navratri, except for tractors, which saw an 8 per cent decline, all categories exhibited commendable growth. Two-wheelers, three-wheelers (3W), commercial vehicles (CVs), and PVs experienced an increase of 22 per cent, 43 per cent, 9 per cent and per cent, respectively.

“However, the impact of local elections and market saturation meant that the festive spirit didn’t translate uniformly into sales across all regions. Throughout the month, the anticipation for Diwali in November and the launch of new models generated a steady demand. The period overall saw a resilient PV market, supported by a stronger product line-up unlike last year, when stock availability was a major issue,” said Singhania.

PV sales fall

In October, the PV retail sales declined 1.36 per cent year-on-year (y-o-y) to 3,53,990 units, compared to 3,58,884 units in the corresponding month last year. Two-wheeler sales also declined 12.60 per cent y-o-y to 15,07,756 units during the month, against 17,25,043 units in October 2022.

However, three-wheeler (3W) sales grew 45.63 per cent y-o-y to 1,04,711 units last month, against 71,903 units in the same month the previous year. CV sales also grew 10.26 per cent y-o-y to 88,699 units in October, compared to 80,446 units in corresponding month last year.

Tractor sales also grew by 6.15 per cent y-o-y to 62,440 units, compared to 58,823 units in October 2022, said the report. But due to the decline in sale of 2W and PVs, the total sales across all categories declined 7.73 per cent y-o-y to 21,17,596 units during the month, compared with 22,95,099 units in October 2022, the FADA report added.