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Informist, Tuesday, Mar. 11, 2025

 

By Avishek Rakshit

 

KOLKATA - The double whammy caused by the ongoing inflation and the downturn in the stock market is expected to lead to lower retail automobile sales volumes in March as well, continuing the decline witnessed in February, Federation of Automobile Dealers Associations President C.S. Vigneshwar told Informist.

 

"Demand is muted now, but sales are expected to pick up towards March-end. But looking at the current demand conditions, I think sales in March will be lower (on year) in tune with what we saw in February," Vigneshwar said on the sidelines of an event organised by the automotive dealers' federation here.

 

The overall retail automobile sales in the country declined 7.2% on year to 1.90 million units in February. The retail automobile sales were 2.13 million units in March last year.

 

"On one hand, there is inflation, and also the stock market has been down for sometime now. Both are impacting the money available with consumers, which is leading to the sales slowdown," Vigneshwar said. The used cars market in the country is growing at a rate of 1.8 times more than the new vehicles market, he said. 

 

Sales of passenger vehicles declined 10.3% on year to 303,398 units, and two-wheelers fell 6.3% to 1.35 million units in February, according to data from the federation. Sales of commercial vehicles in February fell 8.6% to 82,763 units. 

 

Laden with a huge stock inventory, the federation is expecting discounts to drive some demand. "I think discounting is going to go up by another 2-3% in March. Dealers have a huge stock inventory, which they will have to clear. So apart from company-offered discounts, dealers will also be widening discounts," FADA Chief Executive Officer Saharsh Damani said.

 

As compared to the inventory overhang of 80-90 days around six months back, dealers now have an inventory of 50 days, Vigneshwar said, adding that an inventory of 21 days was ideal.

 

The federation is in talks with the Central government for a law to protect the retailers in view of the exit of foreign automobile companies in the recent past. "We have been in talks with the government to come up with this Act. The problem is that foreign automotive companies suddenly announce their plans to exit India, and they don't take back the stocks with the dealers. This creates a huge problem," Vigneshwar said.

 

The official said that foreign automobile companies need to have uniform policies for India in line with their global policies. "Currently, policies related to dealers of foreign companies vary widely," he said.

 

For instance, Honda has implemented 83% of its global practices with dealers in India and is expected to implement another 8-10% of its policy in India in the coming financial year. "But Korean and European companies have a strange approach. They have a different policy regarding their retailers in their own country, and the policy differs in India," Vigneshwar said. "At the same time, MG Motors' policy towards dealers is uniform both globally and in India."

 

According to the federation, sales of electric vehicles have been lower than expected in the ongoing financial year. "There are ongoing challenges in electric vehicle infrastructure in India, which is impending its growth and acceptance. Also, there is the problem of customers perceiving lower after-sales value for electric vehicles. The dynamics of electric vehicles demand globally has changed now," Damani said.

 

Damani was referring to the slowdown in the adoption of electric vehicles in Europe and the US's departure from its electric vehicles promotion under the Trump administration. End

 

Edited by Saji George Titus

 

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