The Indian automotive retail sector recorded a 9.1% year-on-year (YoY) growth in calendar year 2024 (CY’24), overcoming multiple hurdles, including extreme weather, elections, and uneven monsoons. However, the momentum slowed in December 2024, with overall retail witnessing a 12.4% YoY decline, impacted by weak consumer sentiment and sector-specific challenges.
CY’24 Performance Highlights
Two-Wheelers (2W): Grew by 10.7%, nearing its CY18 peak despite constraints in financing and competition from electric vehicles (EVs).
Three-Wheelers (3W): Posted a 10.4% rise, achieving an all-time high.
Passenger Vehicles (PV): Increased by 5.1%, also hitting a record high but grappling with inventory and discount pressures.
Tractors: Saw modest growth of 2.5%, reaching new highs.
Commercial Vehicles (CV): Growth remained nearly flat at 0.07%, with the segment yet to surpass CY18 levels due to uncertainty tied to elections and low infrastructure spending.
December 2024: Sectoral Challenges
2W (-17.6%): Decline attributed to low cash flow, delayed harvest payments, and intense competition from EVs.
3W (-4.5%): Marginal dip due to weakened rural demand.
PV (-1.9%): Impacted by high post-festive inventory, aggressive discounting, and deferred buyer decisions.
CV (-5.2%): Struggled with weak sentiment, delayed government funding, and financing bottlenecks, though tippers performed relatively well.
Tractors (+25.7%): Bucked the trend with significant YoY growth due to robust rural demand and favorable market conditions.
Near-Term Outlook
Two-Wheelers: Could benefit from improved minimum support prices (MSP) and better rural liquidity, though financing challenges and the EV shift may persist.
Commercial Vehicles: Recovery depends on infrastructure projects and easing credit constraints.
Passenger Vehicles: Expected to gain traction from new launches, marriage-season demand, and promotional activities, but potential price hikes might limit gains.
A survey revealed that 48.09% of dealers anticipate growth in January 2025, while 41.22% expect flat sales and 10.69% foresee a slowdown. Industry stakeholders remain cautiously optimistic about the coming months, hoping for supportive policies and improved market dynamics.
