Retail vehicle sales in India rose by 11.21% in November 2024, reaching 32,08,719 units, buoyed largely by strong two-wheeler demand. However, passenger vehicle (PV) sales faced challenges, with a notable decline of 13.72%. The Federation of Automobile Dealers Associations (FADA) attributed the performance to varied factors, including festive spillovers, subdued rural interest, and a weak market sentiment. This article explores the key trends shaping the Indian automotive market and provides an outlook for the near future.

Two-Wheeler Segment Drives Growth

Two-wheeler sales surged by 15.8% year-on-year, recording 26,15,953 units in November 2024.

Festive Boost: The growth was attributed to the spillover of festive demand from October, especially due to Deepawali’s late occurrence.
Rural Resilience: Rural markets provided significant support to this segment, particularly driven by seasonal demand and the ongoing marriage season.
Challenges Persist: Despite the growth, some buyers delayed purchases, waiting for new-year models or influenced by subdued post-festive sentiment.

Passenger Vehicle Sales Decline Amid Market Headwinds

Passenger vehicle (PV) retail sales fell by 13.72%, registering 3,21,943 units compared to 3,73,140 units in November 2023.

Dealer Feedback: FADA noted weak consumer sentiment and a lack of significant new launches as key deterrents.
Inventory Concerns: Inventory levels remain elevated at approximately 65–68 days, despite a 10-day reduction.
Shift in Festive Demand: The pull-forward of demand to October significantly impacted November’s performance, with marriage-related sales falling short of expectations.

Commercial Vehicle Sales Contract Due to Multiple Challenges

Commercial vehicle (CV) sales dropped by 6.08%, with 81,967 units sold compared to 87,272 units in November 2023.

Market Sentiment: Weak demand was attributed to restricted product choices, limited financier support, and the absence of major November festivals.
Sectoral Pressures: A slowdown in industries like coal and cement further dampened demand, alongside external factors such as elections.
Outlook: FADA expressed concerns about the broader macroeconomic impact on this segment’s recovery.

Moderate Growth in Three-Wheeler Sales

Three-wheeler sales showed modest growth of 4.23%, reaching 1,08,337 units in November 2024.

Stable Performance: The segment saw steady demand, benefiting from a balance of urban and rural requirements.
Sector-Specific Dynamics: Market sentiment remained cautiously optimistic, with pockets of growth observed in certain regions.

FADA’s Call for Rationalized Inventory Levels

FADA reiterated its appeal to Original Equipment Manufacturers (OEMs) to address inventory challenges.

Impact on Discounts: Rationalizing inventory could help the industry avoid excessive year-end discounting and enable a healthier start to 2025.
Dealer Perspectives: Dealers emphasized the need for strategic inventory management to maintain profitability and stability in the market.

Near-Term Outlook: Stability with Cautious Optimism

FADA projects a stable yet cautiously optimistic outlook for December 2024.

Two-Wheeler Demand: Rural stability and year-end discounts could offset hesitations among buyers awaiting new-year models.
Passenger Vehicles: Heavy discounting and improved product availability are expected to counter weak sentiment, potentially lifting sales.
Macroeconomic Factors: A strong Kharif harvest and easing food inflation could improve consumer confidence, aiding demand across categories.

Better Future Expectations

November 2024 highlighted the contrasting trends within India’s automotive market. While two-wheelers recorded robust growth, passenger and commercial vehicle segments faced notable challenges. As the industry prepares for the year-end, FADA’s strategic recommendations and macroeconomic improvements could pave the way for recovery. A cautiously optimistic sentiment prevails, with the potential for targeted interventions to drive growth across all categories.