The Lean Period for Indian Automobile Manufacturers: Decline in Demand and Weather Extremes Affect Sales

Indian automobile manufacturers experienced a decline in shipments to dealers for the first time in ten quarters between July and September, according to recent data from an industry association. The once-thriving demand for larger vehicles has noticeably decreased. The sales figures of automobile manufacturers to dealers fell by 1.8% overall in July, August, and September compared to the previous year. As a result, sales figures for the second quarter amounted to around 1.06 million vehicles, as reported by the Society of Indian Automobile Manufacturers. In the second quarter of the previous year, growth had already slowed from 4.7% to 3% during April to June. Interestingly, the decline in manufacturer sales coincided with an even sharper drop of 4.5% in dealer sales to end customers during the same period. This downturn was documented by the Federation of Automobile Dealers Associations (FADA). A primary reason for the weak sales year was the unusually heavy rains in June and July and the advancement of the pre-festive period, which occurred entirely in September this year, a traditionally unfavorable time for high-priced purchases. Shailesh Chandra, president of SIAM, pointed out that "heavy rainfall in key states impacted the sales figures of some segments." Particularly affected was the commercial vehicle segment, including SUVs, whose growth compared to the previous year slowed from 23.5% to just 9%. These vehicles have been a growth driver for three years and account for about one-third of total sales, benefitting companies like Mahindra & Mahindra and Toyota. Adding to the difficulties, sales of small cars plummeted by almost 20%, burdening market leaders Maruti Suzuki as well as Tata Motors and the soon-to-be-listed Hyundai India. Nonetheless, Chandra remains optimistic: He expects a return to growth for the fourth quarter, supported by the demand of the festive season being almost entirely spread over the period.