After an impressive festive season, car sales likely to cool down in Dec

Passenger vehicle (PV) sales are likely to undergo a sharp correction in December, according to a report in The Economic Times (ET). The news signals that Asia's third-largest auto market is beginning to lose steam after an impressive festive season demand. Industry estimates suggest that the sales in December 2023 are likely to be in the range of 275,000-280,000 units, the newspaper reported.

December would be the first month in 2023 to register less than 300,000 passenger vehicle sales. In the first eleven months of 2023, PV sales have registered a monthly average sales of 345,000 units. On a month-on-month (compared to November 2023) basis, sales in December are expected to decline by 55,000 units, according to the report.

December is usually marked with weaker sales as customers tend to wait for the new year to get the newest cars with the changed model year.

High stocks in December

Shashank Srivastava, senior executive officer of sales and marketing at Maruti Suzuki India, told ET that the stock for the industry at the beginning of December was around 330,000 units. For other months, this number is not high, but carmakers and dealers want to have a minimum stock during December, and this year, the PV industry has a lot of cars in stock. Srivastava said that The industry will likely focus on retail sales rather than the wholesales. He added that the stock levels are expected to plummet and reach 150,000 by the end of December.

Steep discounts to clear stocks

Talking about the stock and the need for it to come down, Srivastava told ET, "The stock levels are high and there are close to 700,000 PVs in the system which is equivalent to more than 60 days of sales. The wholesales (dispatches) for the next two to three months need to come down to 245,000 units, and only then will the stock get corrected and come down to 40-45 days."

To bring down the stock levels, the Federation of Automobile Dealers Associations (Fada) has written to the auto industry body, the Society of Indian Automobile Manufacturers (Siam), not to overburden the dealers with excessive stock. According to Srivastava, despite heavy discounts, stock reduction is unlikely to go over 70,000-80,000 units, the ET report said.