Automobile retail grows by 9.1% in 2024; December sees 12.4% drop in sales: FADA

India's automobile retail sales grew 9.1% in 2024 while December recorded a 12.4% year-on-year decline, dealers' body FADA said on Tuesday.

Federation of Automobile Dealers Associations (FADA) president C S Vigneshwar noted that segments like 3W, PV, and tractors reached all-time highs despite hurdles such as extreme weather, elections, and uneven monsoons.

Two-wheelers (2W) grew by 10.7%, three-wheelers (3W) by 10.4%, passenger vehicles (PV) by 5.1%, and tractors by 2.5%. However, the CV category continues to lag behind its pre-pandemic high, hindered by election-related uncertainties and reduced infrastructure spending.

"In 2W, improved supply, fresh models and strong rural demand propelled growth, though finance constraints and rising EV competition remain challenges," Vigneshwar said. "CV performance was subdued amid election-driven uncertainty and reduced infrastructure spending."

In December, overall retail sales fell by 12.4% YoY, with 2W (-17.6%), PV (-1.9%), 3W (-4.5%), and CV (-5.2%) all witnessing declines. Tractors stood out with a 25.7% YoY growth.

Dealers cited low cash flow and poor market sentiment—exacerbated by delayed crop payments, halted government disbursements and typical year-end factors—as the main reasons behind the substantial drop in two-wheeler sales.

"Many dealers also mentioned that heightened discounts and limited financing options failed to offset weak demand," the FADA chief said.

Outlook for 2025

FADA expects a cautiously optimistic start to CY’25, supported by rural income growth, infrastructure investments, and a wave of new launches.

"In 2W, improved MSP and rural fund inflows could bolster sales, although financing challenges persist," the dealers' body said.

The PV segment is projected to gain from upcoming launches and wedding season demand, though potential price hikes could moderate growth. CV sales may pick up, contingent on infrastructure projects and credit availability.

"Auto dealers remain hopeful that steady product availability, strategic marketing and supportive government measures will sustain momentum in the near term," FADA said, urging PV OEMs to carefully manage their supplies in line with market demand.