Car sales in November tumble despite positive factors at play. Here's decoding the trends

Despite high hopes of a strong performance in November, the car market in India remained lukewarm with data from the Federation of Automobile Dealers Associations (FADA) revealing passenger vehicle retail sales falling by 13.72 per cent last month when compared to November of 2023. This despite expectations that the marriage season in most parts of the country as well as spillover registrations from Diwali in late October would add wind to the sales' sails.

The FADA data released on Monday reveal that while the two-wheeler (15.8 per cent growth), three-wheeler (4.23 per cent) and tractor (29.88 per cent) segments fared well in November, the cause of concern stemmed from the faring of the passenger vehicle segment. Commercial vehicles' segment also failed to impress with a year-on-year decline of 6.08 per cent.

Why car sales in India remain in murky waters?

Car sales in the country fell by 13.72 per cent in November (on a year-on-year basis) and by a significant 33.37 percent on a month-on-month basis. As per FADA, dealers have cited weak market sentiment, limited product variety and insufficient new launches, compounded by the shift of festive demand into October, as some of the significant challenges.

The pain points are largely located in major urban pockets because while rural demand has been positive, it has been unable to offset the rickety showing in major metropolitan cities as well as other Tier I and II cities.

As such, inventory levels are largely at around 65 to 68 days and FADA is urging OEMs to further rationalise inventory so that the industry can enter the new year on a healthier footing.

Opportunities and challenges for the car market

December is likely to be another challenging month for carmakers as the last month of every calendar year usually sees lower demand from buyers at large. What could, however, inject some momentum into sales are the discounts and offers from brands as well as those at the dealership level. Almost every manufacturer has also announced a price hike effective January 1 and this too could lead to swifter sales. FADA also points to prospects of a bumper Kharif harvest which is likely to temper food inflation and in turn, positively impact the broader macroeconomic environment.

But cautious optimism is what is at play. A majority of potential car buyers in the country are likely to defer purchase plans to 2025 and wait it out for newer models. A number of car models are expected to either be unveiled or launched or both at the Bharat Mobility Expo which is scheduled to be held in Delhi between January 17 and 22.

Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.