Sales from car manufacturers to dealerships were flat or slightly lower, with the exception of SUVs which saw notable growth. Indian car dealerships saw a 32.4% increase in sales this October compared to last year, fueled by the festive season, new models, and ongoing deals. However, the increase in sales has not offset the high inventory levels, leaving dealers with an overstock of unsold vehicles.
Dealers sold 4,83,159 units in October 2023, up from 3,64,991 units during the same month last year, according to the Federation of Automobile Dealers Association (FADA). The increase is largely attributed to the timing of the festival season, an auspicious time for Indians to make large purchases, which began earlier this year. This year's festivities commenced at the start of October as opposed to mid-October in 2022.
“This year, the festival season -- an auspicious time during which Indians typically make big-ticket purchases -- started in early October, compared with mid-October last year, lifting sales in the month.”
Retail sales figure
While retail sales have benefited from the festival season, wholesale figures have told a different story. Sales from car manufacturers to dealerships were flat or slightly lower, with the exception of SUVs which saw notable growth. Despite the robust retail sales figures, the influx of inventory from the slower wholesale months has pushed the average time a car remains in the showroom to between 75 and 80 days, a significant jump from the one-month standard.
“And while that helped retail sales clock double-digit growth, wholesales, or carmakers' sales to dealers were flat or inched lower last month, with SUVs sales the lone bright spot.”
"But despite the slow wholesales and strong retail sales, a car stayed in a showroom five additional days, on average, in October before being sold, increasing the so-called inventory days to 75–80, versus the recommended level of about a month, FADA said."
What impacted auto sales?
As a result of the excess inventory, FADA anticipates discounts will continue through the remainder of 2023. While small cars make up the majority of unsold units, SUVs are making up a growing percentage. Both dealerships and car manufacturers have acknowledged that harsh weather conditions, from extreme heat to heavy rain, during the April to September period impacted customers’ willingness to visit showrooms. Many potential buyers opted to postpone their purchases in the hope of securing larger discounts during the festival season.
“While the unsold vehicles have mostly comprised small cars, the proportion of SUVs has been inching up, FADA said.”
“Carmakers and dealers have said that extreme heat and then heavy rains have curtailed showroom visits from April to September, with many customers having delayed purchases until the festive period in the hope of bagging higher discounts.”
To better reflect the different festival dates between 2022 and 2023, FADA will release retail sales figures for a 42-day period encompassing October and November on November 14th.
“FADA will report retail sales for a 42-day period spanning October-November on Nov. 14, taking a longer timeframe to account for the different festival dates this year and last.”
