The passenger vehicle market is back in the green after two months of decline, despatches likely to grow by 2% year on year.
26 Sep 2024 | 5169 Views | By Ashutosh R Shyam and Ketan Thakkar
As the peak festive season approaches, the car makers are back to filling the inventory pipeline in September. After two months of negative growth, the Indian car market will return to positive territory. Sources say passenger vehicle despatches for September are estimated to be around 3.7 lakh units, an ...
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As the peak festive season approaches, the car makers are back to filling the inventory pipeline in September. After two months of negative growth, the Indian car market will return to positive territory. Sources say passenger vehicle despatches for September are estimated to be around 3.7 lakh units, an increase of 2.2%.
If the industry reaches this monthly figure, it will record the highest September sales. Notably, if September 2024 exceeds 370,000 units, it would become the third-highest monthly sales volume, following October 2023's 389,719 units and January 2024's 393,076 units.
The vehicle makers calibrated production and despatches in July and August to correct the piled-up inventory at the car dealership. With festivities kicking in September, despatches have risen.
The higher number can be attributed to higher factory deliveries, which ensured the right model mix for the festive seasons of Onam in Kerala and Ganesh Chaturthi in Maharashtra. Also, the stock built up in the second half of September will help the vehicle makers cater to the expected spike in demand during the festivities of Navratri and Dussehra in the next fortnight.
C S Vigneshwar, president of the Federation of Automotive Dealers Association, says there has been a slight uptick in demand in the initial festive period, but the retails are still below expectation.
“The season hasn’t been phenomenal so far, but there is a slight improvement in retail. The stock continues to remain high at around 74-75 days, the only solace is consumer sentiment is good, and we hope to liquidate the stock in the peak festivities of Navratri, Dussehra and Diwali,” he added.
Historically, September, October, and November account for 26-27% of total calendar year sales, with cumulative sales exceeding one million units in both 2022 and 2023.
The passenger vehicle (PV) industry's growth in September is expected to be primarily driven by Mahindra & Mahindra and Toyota, which have consistently outperformed this year.
Industry sources estimate that M&M’s passenger car sales may reach 47,000-48,000 units in September, bolstered by new product launches that could position the company as the third-largest vehicle manufacturer.
M&M's previous monthly high was 43,708 units in October 2023. Similarly, Toyota's sales are projected to be in the range of 28,000-29,000 units. The cumulative volume for the top five car manufacturers is anticipated to be around 320,000-330,000 units.
However, the sustained push from carmakers in a challenging market is raising concerns among dealers, as inventory levels have ballooned to 70-75 days as of August 2024, compared to 50-55 days at the start of the year.
So far this calendar year, the passenger car market has grown by 5% to 2.84 million units from January to August 2024 year-on-year, which is almost half of the growth rate witnessed by the industry in the same time frame last calendar year, clearly underlining the high base industry is on.