Carmakers Pin Hopes On Festive Revival After Sales Drag In First Half Of FY25

Carmakers in the world’s third largest automotive market are banking on the festive season to deliver some growth in Fiscal 2025 after sales dragged in the first half.

Industry lobby Society of Indian Automobile Manufacturers, or SIAM, expects car sales in India to grow at 3-5% in the fiscal ending 31 March 2025 as against 5-8% predicted at the beginning of the year.

“It was a slight surprise, especially in the Month of May and June, which did not play out as per our expectations,” SIAM President Shailesh Chandra said at a media scrum on Monday. “I would say April was still good, but then we saw moderation in May and June. September was still good but offset by the Shraadh period (inauspicious period for vehicle purchases).”

“That’s why the industry expects a sub-5% growth in FY25,” he said.

First a heatwave in April-May, and then general elections that spilled into June, limited the footfalls at car dealerships across India. The heatwaves gave way to an incessant monsoon that curtailed demand even further. A high base effect—at nearly 42 lakh units, India’s car industry clocked its highest ever volumes in 2023—also weighed on sales.

In the six months through 30 September, Indian carmakers dispatched 20,81,143 passenger vehicles to dealerships, as against 20,70,960 units in the year-ago period—a growth of 0.5% year-on-year, according to SIAM data.

Over the same time, retail sales—calculated as vehicle registrations on the government’s VAHAN website—rose 1.07% year-on-year to 18,70,991 units, according to data sourced from the Federation of Automobile Dealers Associations.

In the July-September period, wholesales declined 1.8% year-on-year to 10,55,137 units. In September alone, they were down 1.4% over the year-ago period. Retail sales declined 5.13% year-on-year in the second quarter and 18.81% last month.

Clearly, dispatches haven’t converted into actual sales on the showroom floor—so much so that the world’s third automotive industry is now saddled with record-high inventory.

According to FADA, as many as 7.9 lakh cars worth Rs 79,000 crore are languishing at dealerships. That’s equivalent to 80-85 days of unsold stock. While retail sales are likely to see a significant bump-up in October—Dussehra, Dhanteras and Diwali are in the same month—the backlog is unlikely to be wiped out, industry watchers told NDTV Profit.

To be sure, there are some strong signs of a revival in demand.

In the first 12 days of October, vehicle registrations have jumped 25% compared to the previous month, SIAM’s Chandra said. FADA President CS Vigneshwar told NDTV Profit that dealerships are witnessing a four-fold surge in inquiries and bookings.

“With the monsoon ending and continued infrastructure spending, and the arrival of the festive season boosting demand, we anticipate healthy demand in the next quarter,” Chandra said. “The second half (of the fiscal) has a big burden now and, hopefully, the festive period should be able to deliver on the growth expectations.”