Auto sales stay negative: Bumper discount deals fail to ring in happy end to year 2024

NEW DELHI: Over 800,000 brand-new cars worth nearly Rs 200,000 crore are gathering dust in massive stockyards on the outskirts of cities, and the numbers are growing. Sales of two-wheelers and three-wheelers have also shown a negative trend in November 2024, with only ‘Total Passenger Vehicles Sales’ figures ringing in some good news with 4.41 per cent growth, according to data released by the Society of Indian Automobile Manufacturers (SIAM).

The data shared by SIAM shows that November ‘Passenger Car’ sales fell YoY to 97,186 units, down 5.24 per cent compared to the 102,558 units sold in November 2023. Two-wheeler sales, which often come to the rescue, didn’t manage a turnaround this year, notching up sales of 16,04,749 against 16,23,399 units registered last November, a fall of 1.15 per cent. Three-wheeler sales were disappointing as well, falling 1.32 per cent to 59,350 units this November compared to 60,143 units last year.

However, ‘Total Passenger Vehicles Sale’ brought in some good news, notching up a total number of 300,459, up 4.41 per cent from last November’s figures of 287,765 units. A caveat shared by SIAM was that unit numbers for BMW, Mercedes, Jaguar Land Rover, Volvo Auto and Tata Motors were not available and, thus, not included in the report for November. 

SIAM also pointed out that the increased festive demand witnessed in October this year was carried over to November as well. Explaining, SIAM Director General Rajesh Menon said: “While the two-wheeler and three-wheeler segments witnessed minor de-growth in November, the passenger vehicles category recorded its highest sales ever. Though the Diwali festival did not fall in November, the two-wheeler segment posted sales of over 16 lakh units.”

In a pre-Diwali statement, SIAM President Shailesh Chandra had projected a growth of 3-5 per cent in overall vehicle sales, hoping that no major alarms were raised from the macro-economic perspective. Chandra also said he is optimistic about growth in the second half of the fiscal, which would offset the flattish growth in H1.

Expressing hope that the EV (electric vehicles) space would gather momentum in the near future, Chandra pegged his hopes for infrastructural bottlenecks to be removed, especially after government initiatives in this regard. “The government has allocated funds to set up 22,000 fast chargers for four-wheelers under the PM E-Drive Scheme. That is going to help. Also, EV prices have come down to a level where they are matching ICE (Internal Combustion Engines) vehicles with automatic transmissions. The driving range is also increasing. Given that this is the technology of the future, short-term hiccups are not too much to bother about.” SIAM has projected a 12.03 per cent growth in overall production numbers in April-November 2025 to 2,04,25,4221 units, up from 1,82,32,098 in the same period in 2024.

What has pressured India’s automobile companies is the spectre of overproduction, mostly driven by optimism and a need for growth. With customers tightening their purse strings with household expenses going up, expenditure on aspirational purchases such as cars and two-wheelers has reduced. The Reserve Bank has also noted that earnings in India have not been keeping up with inflation and higher household expenditure.

Shoring up this observation were findings of the Household Consumption Expenditure Survey, which said average real income growth was at a 40-year low, with headline inflation continuing to hurt households. RBI also scaled down real GDP projections for FY ’25, with ‘real GDP growth’ at 7.2 per cent (7.3 per cent earlier) and Q1 at 7.1 per cent (7.3 per cent earlier). Cumulative impact of lower earnings could lead to further reining in of growth projections.

The Centre for Monitoring Indian Economy (CMIE) has voiced similar thoughts. “When basic living expenses are outpacing income growth, luxury spending takes a backseat,” CMIE said, pointing out that unemployment rates were at an eight-month high of 9.2 per cent. That, in itself, is enough to understand why new car purchases are taking a back seat.