auto sales falls in Q4
April 2, 2025 admin Leave a reply Post Comment

Car dealers struggle as demand slows, inventory piles up

Car dealers are offering discounts, usually available during festivals like Diwali, to clear inventory that has piled up from about a fortnight at the start of the year to up to 55 days in March as demand slows, according to industry executives and brokerages.

“Retail sentiment in the automotive sector has evidently turned negative, marked by double-digit drop-in walk-ins and inquiries,” Amit Hiranandani of PhillipCapital wrote in a 30 March note. “Inventory levels have risen, and discounts are approaching those seen during the Diwali season in an effort to clear stock. Additionally, the duration from inquiry to conversion has lengthened.”

While the inventory levels are close to about 50-55 days seen a year earlier, sales declined 10% in February this year compared with a growth of 12% in the same month in 2024.

The country’s largest carmaker Maruti Suzuki India Ltd sold about 17.95 lakh passenger vehicles in the financial year 2025, showing marginal growth compared with a 9% increase in the previous fiscal.

The second-largest carmaker, Hyundai Motor India Ltd, sold about 5.98 lakh units, 16% lower than the previous fiscal year. Tata Motors Ltd’s passenger vehicle sales declined 3% to 5.56 lakh in FY25.

Bigger discounts

That has prompted bigger than usual discounts.

“Discounts remain elevated across OEMs, particularly at the dealer level, with average price discounts nearly 75-80% higher year-on-year,” wrote Aniket Mhatre and Amber Shukla of Motilal Oswal Financial Services.

Weak consumer sentiment in the market is hurting the carmakers and increasing the pain for dealers.

According to PhillipCapital, inventory levels at Maruti have risen from nine days as of 1 January to around 40-45 days. Hyundai and Tata’s inventory have risen to 50-55 days. Mahindra’s inventory is about 30 days.

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