Carmakers Pin Hopes On Festive Revival After Sales Drag In First Half Of Fiscal 2025
SIAM has tempered its growth projections to 3-5% for FY25 as against 5-8% predicted at the beginning of the fiscal.
Carmakers are relying on the ongoing festive season to generate some growth in fiscal 2025, following a decline in sales in the first half of the financial year.
The Society of Indian Automobile Manufacturers expects car sales in India to grow at 3-5% in the fiscal ending March 31, 2025, as against 5-8% predicted at the beginning of the year.
“It was a slight surprise, especially in 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 (an inauspicious period for vehicle purchases).”
“That’s why the industry expects a sub-5% growth in fiscal 2025,” he said.
A Perfect Storm
First a heatwave in April-May, and then general elections that spilt into June, limited the footfalls at car dealerships across India. The heatwaves gave way to an incessant monsoon, which curtailed demand even further. A high base effect—India’s car industry clocked its highest ever volumes in 2023—weighed on sales.
In the six months through Sept. 30 2024, 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 data sourced from the Society of Indian Automobile Manufacturers.
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 translated into actual sales at the showroom floor—to the point where the third-largest automotive industry in the world is currently dealing with record-high inventory.
According to FADA, as many as 7.9 lakh cars worth Rs 79,000 crore are languishing at dealerships, equivalent to 80–85 days of unsold stock. While retail sales are likely to see a significant bump-up in October—with Dussehra, Dhanteras, and Diwali in the same month—the backlog is unlikely to be wiped out, industry watchers told NDTV Profit.
Festive Revival
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 enquiries 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.”
