December 2024 proved to be a setback for the automobile sector with total retail sales declining by 12 per cent year-on-year, data shared by the Federation of Automobile Dealers Associations (FADA) said.

It highlighted that all the categories, except tractors, registered de-growth, with two-wheelers declining by 18 per cent, passenger vehicles by 2 per cent, commercial vehicles by 5.2 per cent, and three-wheelers by 4.5 per cent.

Advertisement

Supply challenges for popular models and the increasing shift towards electric vehicles (EVs) further impacted two-wheeler volumes.

Dealers attributed the decline to low cash flow and poor market sentiment, worsened by delayed crop payments, halted government disbursements, and typical year-end factors.

For calendar year 2024, the highest-ever overall retail sales stood at 26.1 million, up 9 per cent from 23.9 million in 2023.

The data highlighted that the two-wheelers posted an 11 per cent increase, followed by three-wheelers at 10.5 per cent, passenger vehicles at 5 per cent , tractors at 3 per cent, and commercial vehicles with a marginal 0.07 per cent growth.

“Rural markets were not performing poorly during the month, and tractor sales are evidence of that. However, money may not have reached farmers yet, compounded by issues related to credit availability. Typically, the last week of December sees a 50 per cent sales surge, which did not occur this year,” said C S Vigneshwar, president of FADA.

“We believe buyers might have deferred their plans, and January may witness improved sales.”

Passenger vehicle retails fell by 1.9 per cent year-on-year and 8.8 per cent month-on-month, primarily due to high inventory levels after the festive season and aggressive discounting aimed at clearing stock.

The two-wheeler segment suffered a significant 17.6 per cent year-on-year drop and a 54.2 per cent decline month-on-month.

Commercial vehicle (CV) retails fell by 5.2 per cent year-on-year and 12.1 per cent month-on-month due to low market sentiment, delayed government fund disbursements, and slow financing approvals.