Car Sales in India Plunge by 4.53% – Here Are the 5 Shocking Reasons Behind the Decline!

Car sales in India: Car sales in India have been declining for some time now. Until some time ago, one had to wait a long time for Mahindra and Maruti cars. But now, these bestseller cars are easily available. Even the dealers are ready to give good discounts on almost all the models, because due to the sales, the stock of cars with the dealers has increased.

Federation of Automobile Dealers Associations (FADA) has released the sales figures for August 2024 of all car manufacturers like Maruti Suzuki, Tata Motors, MG, Kia, Hyundai, Mahindra.

Sales in the auto retail market have increased slightly in August, but this increase was very small. A marginal increase of 2.88% was registered from last year. But sales of cars, tractors and commercial vehicles have decreased. Sales of cars decreased by 4.53%, sales of tractors decreased by 11.39% and sales of commercial vehicles decreased by 6.05%.

According to FADA Research, a total of 3,09,053 personal cars were sold in August 2023. Whereas 3,20,129 cars were sold in the previous month and 3,23,720 cars were purchased in August 2023. Similarly, 73,253 commercial cars were sold in August 2024. Whereas 80,057 cars were sold in the previous month and 77,967 cars were sold in the same month last year.

Now let us understand the reason behind this decline in car sales in this special story.

1- Uncertain weather of rains

This monsoon season, the rainy season has been very uncertain. First it was very hot, due to which the rains started late. Then suddenly it started raining very heavily, which caused floods in many places. In August, there was 15.9% more rain across the country. North-west India saw an excess of 31.4%, East and Northeast 7.2%, Central India 17.2% more rain. 

Heavy rains, floods and landslides have badly affected the market. The need for trucks and buses has reduced due to reduced construction work. The need for trucks and buses has reduced due to reduced demand for goods in industries. 

FADA has reported that passenger vehicle (PV) sales declined by 3.46% last month and this decline is 4.53% year-on-year. Despite the arrival of the festive season, there is still a lot of pressure on the market as customers are not buying. The main reason for this is continuous heavy rains. Car companies have accumulated a lot of stock of cars. This stock is of 70 to 75 days. The value of these cars is around Rs 77,800 crore.

FADA said that instead of resolving the situation, the vehicle manufacturers (OEMs) are increasing the delivery of more cars to the dealers every month. This is further increasing the problem. FADA has appealed to banks and non-banking financial companies (NBFCs) to control the funding of dealers with excess stock. Dealers should also avoid taking excess stock.

2- Cyclical decline in car sales

One of the main reasons for the decline in car sales is cyclical. Car sales had increased significantly in the last 36 months. Therefore, a slight decline is natural now. After everything became normal again after the Corona epidemic, the demand increased, so production was not able to happen that much. But now this demand has decreased and customers do not even have to wait to buy their favorite. 

Car companies are still making a lot of cars. It is becoming difficult to sell these cars and these cars are piling up at dealers. Signs of this were visible after the festival last year, but car manufacturers and dealers ignored it, considering it a temporary phenomenon. 

3- Many new models launched in 12 months

Car companies keep introducing cars with new technology and models. When a new car is launched, people wait a little before buying an old car. This also affects the sale of cars. 

Many new cars and new models of old cars have been launched in the last 12 months. This has reduced the demand for old cars and the stock with car companies has increased. Sales of low-priced cars have decreased. Earlier people used to buy small cars, but now this is not happening. Earlier people used to sell bikes to buy small cars. But now this is happening less. This means that people probably have less money. That is why they are hesitant to buy small cars. 

Due to this problem, many car companies have stopped making small cars or are making fewer of them. Only Maruti Suzuki has continued to make small cars. 

4- The popularity of some cars has decreased

The popularity of vehicles of certain segments is clearly seen to be decreasing. This also includes battery electric vehicles (BEV). There can be many reasons for this. Such as: The price of electric cars is still high. There is a lack of stations to charge these cars. Petrol and diesel cars are easily available. Therefore, people think before buying an electric car. People are still worried about how much distance the battery of BEV can cover on a single charge.

Maruti Suzuki’s Jimny car did not sell as much as the company had expected. The company had to give discounts to sell the cars. On the other hand, sales are improving in some new segments like hybrid vehicles. While Toyota is doing well in the sales of its hybrid models like Hyrider and Innova Hycross. Honda is facing difficulty in selling its City e:HEV hybrid.

That is, hybrid vehicles are improving along with the decrease in demand for electric vehicles and the decline in sales of some ICE cars. This reflects the changing preferences of customers in the automobile industry.

5- Waiting for great discounts and offers

Car companies are now giving discounts on those cars for which one had to wait a long time earlier. Discounts are being given on cars like Mahindra’s XUV700 and Scorpion, Tata’s Harrier and Safari, Maruti Suzuki’s Grand Vitara and Suzuki Ertiga. 

One of the major reasons for the decline in car sales is that when car companies offer huge discounts on cars, people postpone the decision to buy a car. They think that the prices may go down even further. This further reduces the sale of cars. 

It is like a cycle. Car companies have to sell cars, so they give discounts. But when too much discount is given, people postpone the decision to buy a car. This forces car companies to give more discounts. In this way a cycle is formed and car sales keep decreasing.

Car companies will now have to think of something new to deal with this problem. They will have to find new ways to increase car sales. 

6- Will car sales increase in September?

Federation of Automobile Dealers Associations says that according to the Meteorological Department, there will be a lot of rain in September as well. This can damage crops and reduce the income of people in the village. At the same time, the time of Shraadh in September can also create an obstacle in sales, as it is considered inauspicious for shopping.

However, festivals like Ganesh Chaturthi, Onam and Navratri are expected to boost the morale of the people. This can increase the sale of cars. There has been good rain in some places. This will increase the income of farmers and the sale of cars in the villages can increase.

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