The automobile Industry and this festive season have a great tuning. Usually, demand picks up for automobiles during these festives. However, this year seems sluggish for the auto sector but automobile manufacturers are hopeful about the festive sales. Let’s see how the Indian automobile industry is performing and what factors are playing a significant role here.
Automobiles Sector in the Last six months
Domestic sales in the past six months of the year have also been slower with a significant 9.26% decline in September on a YoY basis.
| Month | Sales Volume (units) 2024 | Sales Volume (units) 2023 |
| April | 287746 | 284271 |
| May | 300795 | 288369 |
| June | 294233 | 280252 |
| July | 296785 | 302521 |
| August | 308779 | 313715 |
| September | 315689 | 316908 |
While in the first 3 months of FY25, the sales were marginally higher on a YoY basis, in the past three months, the units of automobiles sold were lower than the sales volume of FY24’s same period.
While the first six months of this fiscal show a decline in the overall sales volume, the exports in this period have risen on the contrary. The automobile exports have gone up by 14% during this period, while in FY24, the overall automobile exports declined by 5.5% owing to the monetary crises in different parts of the world.
Factors Affecting the Automobile Sector
Different factors have affected the demand in the automobile market. It is primarily owing to the geopolitical concerns that are driving the fuel prices volatile. Fuel prices have a significant impact on the automobile sector and thus sluggish demand was noticed during the previous months.
Apart from geopolitical concerns, and fuel prices, it is the weather conditions that also affect the sales. Heavy rainfall this year affected many sectors and the livelihood and income of people. This took a toll on auto sales too as the overall economy became sluggish.
On the contrary, the rising exports resulted from the higher demand for passenger vehicles, and key markets like Latin America, and Africa, which were in FY24 experiencing monetary crunches, have now rebounded. This has mainly added to the export sales number.
Segment-Wise Export Performance
- Export of passenger vehicles rose by 12% YoY during the first six months of FY25.
- Two-wheeler exports surged by 16% YoY for the period April to September 2024
- Scooter shipments rose by 19% during the period
- Commercial vehicle exports grew by 12% between April and September. 2024.
- Three-wheeler sales witnessed a decrease of 1% for the same period on a YoY basis.
Festive Outlook for the Auto Sector
While demand for automobiles goes up during the festivals, in this fiscal, during Onam and Ganesh Chaturthi, which marks the beginning of the annual festive season in India, the demand didn’t surge as expected by the automobile manufacturers.
The declining sale has made the inventory go up massively to an average of 80-85 days which means around 79000 vehicles are in the inventory. The automakers remain hopeful for growing demand and sales with the upcoming Diwali festival but if the sales do not pick up then with a time-high inventory, the automakers, and dealers, will be facing financial pressure.
Source: Mint
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