The overall automobile sales witnessed a significant decline of -9.26% in September, industry body FADA (Federation of Automobile Dealers Association) said on Monday (October 7, 2024).

Ganesh Chaturthi and Onam failed to ignite the demand, FADA said.

The two-wheeler segment witnessed a year-on-year (YoY) decline of 8.51%, driven by weak consumer sentiment, low inquiries, and delayed purchases due to heavy rains and seasonal factors like Shraddh, the FADA said in a statement.

Passenger Vehicles like cards, SUVs witnessed a steep YoY decline of 18.81%.

Commercial vehicles witnessed a YoY decline of 10.45%, with only marginal month-on-month growth of 1.46%, reflecting subdued market conditions and weak government spending, the body said.

The three-wheelers and tractor segments reported a marginal growth of 0.66% YoY and 14.69% YoY respectively, attributed to positive customer engagement and increasing demand for e-rickshaw options, it said.

Passenger Vehicles (PV) Dealers faced an all-time high inventory level of 80-85 days, equivalent to 7.9 lakh vehicles worth ₹79,000 crore due to aggressive OEM dispatches. “The dealers are under financial pressure, with increased cash flow challenges,” the FADA added.

FADA said it is “Cautiously Optimistic” on the overall outlook. “While the festive season presents an opportunity for recovery, the high stakes in October make it crucial for dealers and OEMs to clear existing inventory. Strategic inventory management and targeted festive promotions are key to capitalizing on the expected surge in demand and stabilizing market conditions,” it said.

C.S. Vigneshwar, president, of FADA in a statement said, “The 2024 southwest monsoon recorded 8% above-normal rainfall—the highest in four years—which has boosted Kharif sowing by 1.5% YoY. This increase in agricultural productivity has positively impacted rural demand and economic sentiment.”

“Despite the onset of festivals such as Ganesh Chaturthi and Onam, Dealers have reported that the performance has been largely stagnant. This suggests that overall market sentiment during these festive periods has been underwhelming, with a trend leaning towards flat or negative growth,” he added.

The Shraddh period further impacted sales negatively, leading to a YoY decline in retail sales across various categories. Discounts and offers have been introduced across segments to stimulate demand, but these have yet to translate into a significant improvement in sales, the president said.

The FADA urged the RBI to issue stricter guidelines on channel funding policies to mitigate the financial risk faced by dealers.