Indian car dealers' sales unexpectedly drop in December, FADA says

At the start of December, about 80% of FADA's members had said in an online survey that they expected sales to be flat to higher for the month, recovering from a 14% drop in November.

Indian car dealers clocked a surprise 2 per cent drop in sales in December, with high year-end discounts boosting demand only for a handful of showroom owners, a dealers' body said on Tuesday.

Sales dropped to 293,465 units in the month from 299,351 units last year, according to data from the Federation of Automobile Dealers Association (FADA).

At the start of December, about 80 per cent of FADA's members had said in an online survey that they expected sales to be flat to higher for the month, recovering from a 14 per cent drop in November.

However, demand failed to pick up in the final week of the month, which often accounts for 30-40 per cent of a dealership's sales, FADA President C S Vigneshwar told Reuters.

"While some dealers benefited from year-end schemes and expanded product ranges, overall demand remained subdued," Vigneshwar said in a press release.

Dealers have struggled with tepid demand in the latter half of 2024 following two years of strong growth, forcing them to increase discounts.

Nonetheless, carmakers sales to dealers increased last month, most notably at market leader Maruti Suzuki, which reported a discount-driven rebound in small-car sales.

The demand for Mahindra Mahindra's sport utility vehicles remained strong. Hyundai India's sales dipped, while Tata Motors' increased slightly.

A Maruti official said dealer inventory had significantly dropped.

FADA said the average time a car stayed in a showroom, or inventory days, receded to 55-60 days in December from 65-68 days in November as manufacturers moderated dispatches.

Still, the level is below the FADA-recommended 21 days.

Inventory levels are an indicator of demand. High inventory levels have forced automakers to slow sales to dealers and offer higher discounts.

FADA expects new launches, including those of electric vehicles to spur demand this year, but said manufacturers should "carefully manage their supplies in line with market demand."