Passenger vehicle sales plunge 19% in September

Retail sales of passenger vehicles tumbled 18.81% year-on-year to 2.75 lakh units in September compared with 3.39 lakh units in the same month last year, according to data released by the Federation Of Automobile Dealers Associations (FADA).

Car sales plummeted by 10.8% month-on-month, signalling an alarming trend of declining consumer demand and deteriorating market sentiment, says FADA president C S Vigneshwar.

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, Vigneshwar says.

Seasonal factors such as ‘Shraddh’, coupled with heavy rainfall and a sluggish economy, have exacerbated the situation, leaving dealers with historically high inventory levels of 80-85 days—equivalent to 7.9 lakh vehicles worth ₹79,000 crore.

Discounts and offers have been introduced across segments to stimulate demand, but these have yet to translate into a significant improvement in sales.

Sales of two-wheelers dropped 8.5% year-on-year due to low consumer sentiment, poor inquiries, and reduced walk-ins. Seasonal factors like the Shraddh period  and heavy rains further impacted demand, resulting in delayed purchases and a subdued market environment, says the auto dealers’ lobby.

Commercial vehicle sales increased declined 10.45% year-on-year. “While there was positive sentiment and marginal growth in regions supported by infrastructure projects, overall demand remained weak due to low government spending, extended monsoon delays and seasonal challenges. Despite some improvement in fleet purchases, the market conditions remain subdued,” says FADA.

Given the critical festive season around the corner, FADA has urged OEMs to take immediate corrective measures to avoid a financial setback. FADA also calls on the Reserve Bank of India to issue an advisory to banks, mandating stricter channel funding policies based only on dealer consent and on actual collateral, to prevent dealers from facing additional financial pressure due to unsold stock. “This is the final opportunity for PV OEMs to recalibrate and support market recovery before it's too late,” it says.

“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,” says Vigneshwar. “Strategic inventory management and targeted festive promotions are key to capitalising on the expected surge in demand and stabilising market conditions.”

“The near-term outlook for Automobile Retail is cautiously optimistic as both Navratri and Diwali fall in the same month, creating strong expectations for a surge in vehicle sales. With healthy water levels in reservoirs and improved crop yields supporting rural demand, the festive season is expected to drive a substantial boost in 2W, PV, and Tractor sales,” says FADA.

However, the PV segment faces a critical situation due to high inventory levels at dealerships. "If sales do not pick up as expected in October, dealers could face significant financial pressure from unsold stock piling up in their warehouses," it warns.