December Auto Sales Fall 12 Per Cent YoY: FADA Data Highlights Industry Woes

Retail automobile sales in India for December 2024 saw a sharp decline, falling 12 per cent year-on-year (y-o-y) and a steep 45.26 per cent month-on-month (m-o-m), according to data released by the Federation of Automobile Dealers Associations (FADA). 

This contraction reflects ongoing demand challenges within a slowing economy, with all vehicle categories except tractors reporting negative growth.

Category-Wise Breakdown

Two-Wheelers (2W): The segment recorded a significant y-o-y decline of 17.6 per cent and a staggering 54.2 per cent drop m-o-m.

FADA attributed this sharp fall to delayed crop payments, halted government disbursements, supply shortages for popular models, and the growing shift toward electric vehicles (EVs).

Passenger Vehicles (PV): Sales dipped 1.9 per cent y-o-y and 8.8 per cent m-o-m. High inventory levels following the festive season, coupled with aggressive discounting strategies by co-dealers, contributed to the slowdown.

"Poor market sentiment, limited new model launches, and intense price competition further impacted sales," stated C S Vigneshwar, President, of FADA.

Commercial Vehicles (CV) & Three-Wheelers (3W): These categories also saw contractions of 5.2 per cent and 4.5 per cent y-o-y, respectively, as subdued economic activity and rising costs weighed on demand.

Tractors: Bucking the trend, the tractor segment grew by 25.7 per cent y-o-y, reflecting a healthier year for the farm sector.

The broader downturn in the auto sector underscores persistent demand-side issues exacerbated by delayed rural payments, subdued government spending, and sluggish consumer sentiment. 

Supply chain bottlenecks for certain models, combined with a push toward EV adoption, further contributed to the slowdown in traditional vehicle sales.

Additionally, in the PV segment, inventory challenges post-festive season and limited product innovation led to a subdued market response.

Dealers also cited price competition as a factor affecting overall retail sales.

Despite December's slump, retail vehicle sales grew by 9 per cent for the calendar year 2024. This growth came amidst multiple headwinds, including heatwaves, pre-election uncertainty, and slowing economic growth.

Looking ahead, dealer sentiment for January is cautiously optimistic. A FADA survey revealed that 48.09 per cent of dealers anticipate growth, 41.22 per cent expect stable demand, and 10.69 per cent foresee a potential decline.

FADA remains hopeful that a combination of post-harvest demand recovery, improving rural liquidity, and anticipated government spending ahead of the 2025 Union Budget may help revive sales momentum in the coming months.

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