Sept passenger car sales decline 21.6% ahead of festive season

Even as total passenger vehicle (PV) sales rose 3.09 per cent to 3,16,908 in September 2023 versus 3,07,389 in the same month in 2022, passenger car sales saw a 21.6 per cent decline to 1,11,889 in September 2023 from 1,42,727 in September 2022, data from industry body Society of Indian Automobile Manufacturers (SIAM) showed on Monday. 

Interestingly, this trend was replicated in the second quarter (July-September) of the financial year 2023-24 (FY24), with domestic sales falling to 3,96,499 units from 4,68,513 in the corresponding period a year ago. 

“The degrowth in passenger cars comes with a growth in the utility vehicles (UV) segment,” said Suraj Ghosh, vice president at autonomous mobility company Minus Zero. Remarkably, UVs experienced a significant 28 per cent growth in sales. 

The two-wheeler segment also witnessed a muted growth of less than 1 per cent to 17,49,794 units in September 2023, from 17,35,199 in September 2022. In Q2, domestic sales for two-wheelers declined by 1.6 per cent to 45,98,442 from  46,73,931 in the same period last year. Moreover, the two-wheeler wholesale numbers posted a marginal de-growth, compared to the same period of last year.

“The degrowth in the sales of sub-Rs 6 lakh passenger cars (entry-level cars) and the two-wheeler segment goes to show that the rural economy has not yet bounced back. The demand has been adversely affected by the sustained inflationary pressures and the high cost of fuel,” Ghosh explained. 

“The Indian car market is witnessing a shift in consumer preferences towards UVs. Looking at the long-term trend, the UVs have been steadily increasing their market share, rising from 14 per cent in FY12 to 52 per cent in FY23 and further to 55 per cent in the first quarter of FY24,” said Manish Saigal, managing director at consulting firm Alvarez & Marsal. 

According to SIAM president Vinod Aggarwal, the utility and sports segment is now accounting for around 60 per cent of the overall sales in passenger vehicles and is driving the PV segment. 

The festive season is around the corner and has in fact begun in several parts of the country. Despite that, experts pointed out a rather flat growth in the overall passenger vehicle segment.

The delay in the festive season this year by about 20 days, said Ghosh, adding that the demand is expected to boom between the second half of October and the first half of November.

“There is a fair amount of inventory built up at the dealer end, which is expected to move majorly now that the Shradh period is behind us, therefore, pushing the PV sales,” said Som Kapoor, Partner, EY India.

Among segments, three-wheelers have recorded the highest-ever sales at 1.95 lakh during the quarter under review, registering a growth of 62.2 per cent as compared to Q2 of last year and surpassing the 2018-19 level, the data showed.

The substantial growth in three-wheeler sales can be attributed to multiple factors. “While cargo three-wheelers have experienced considerable growth driven by the demand from e-commerce industries, the growth in September 2023 has been primarily propelled by passenger three-wheeler sales,” said Abhishek Kochar, Senior Director, Alvarez & Marsal.

"It's important to note that passenger three-wheeler sales had not fully recovered to the levels seen in FY19 due to the impact of the Covid-19 pandemic, which led to a delay in the purchase of these vehicles. This recovery has been anticipated for some time," he added.

Commercial Vehicles also posted a notable growth of 6.9 per cent in this quarter, compared to Q2 of last financial year, driven by good growth in medium and heavy commercial vehicles. 

Chennai: In this Friday Aug 23 2019 photo cars are seen parked in a dock at the Chennai Port Trust. Automobile sales in India witnessed its worst-ever drop in August with despatches in all segments including passenger vehicles and two-wheelers continuing to plummet as the sector reels under an unprecedented downturn industry body SIAM reported on Monday Sep 09 2019. (PTI Photo/R Senthil Kumar)(PTI9_9_2019_000067B)

Chennai: In this Friday Aug 23 2019 photo cars are seen parked in a dock at the Chennai Port Trust. Automobile sales in India witnessed its worst-ever drop in August with despatches in all segments including passenger vehicles and two-wheelers continuing to plummet as the sector reels under an unprecedented downturn industry body SIAM reported on Monday Sep 09 2019. (PTI Photo/R Senthil Kumar)(PTI9_9_2019_000066A)