Automakers’ plans to increase prices from January combined with ongoing discounting and end of the year promotions for existing stock, is leading to more footfalls and enquiries from customers, according to auto dealers. 

“The price increases will help in retailing throughout December. Consumers will book their vehicles this month,” CS Vigneshwar, President, FADA, told businessline adding that prospects of a bumper kharif harvest and improvement in the broader macroeconomic environment could aid consumer sentiment in the months ahead.

Maruti Suzuki India Limited (MSIL), Mahindra & Mahindra, Tata Motors Ltd, JSW Motor India, Hyundai Motor India and Kia India have announced price hikes from January. This comes even as the PV sales declined by around 14 per cent year-on-year (YoY) to 3,21,943 units in November, compared with 3,73,140 units in November last year, according to retail sales data released by FADA on Monday. Overall, auto sales grew by 11.21 per cent YoY to 32,08,719 units in November led by higher two-wheeler sales.

Inventory data

Passenger vehicle inventory in November stood at 65 days. Earlier, FADA had flagged an all-time high inventory at 80-85 days in October with dealers across the nation having 7.9 lakh vehicles, valued at ₹79,000 crore in stock. The dealers are cautiously optimistic about lowering the inventory levels at least in the short term. “FADA continues to urge original equipment manufacturers (OEMs) to further rationalise inventory so that the industry can enter the new year on a healthier footing, reducing the need for additional discounts,”  Vigneshwar added.

Experts said the price hikes could be offset by the discounts on offer. Automakers generally take a price increase at the start of the calendar year to help offset factors such as the increase in operational costs on account of inflationary pressures and commodity prices, etc. The recent price hikes announced by various car makers are for the same reason. It must be noted that there are already healthy discounts on offer across a variety of models in the passenger vehicle industry, with the industry focused on bringing down inventory levels,” said Rohan Kanwar Gupta, Vice President & Sector Head – Corporate Ratings, ICRA Ltd. 

According to Vigneshwar, there was an expectation that November will build on its prior momentum, particularly due to the marriage season, but dealer feedback suggests that this segment underperformed overall expectations. “Although rural markets offered some support, primarily in the 2W category, marriage-related sales remained subdued. The late occurrence of Diwali at the end of October also caused a spill over of festive registrations into November, affecting the month’s sales trajectory,” Vigneshwar said.

2W sputters

In the two-wheeler (2W) segment, dealers suggest that while some buyers remain hesitant — either awaiting new-year models or influenced by subdued post-festive sentiment — others could be drawn by potential year-end discounts and stable rural demand. Although momentum may not be robust, incremental schemes and easing inflation could lend mild support, placing two-wheelers on a cautiously positive footing, the retail industry body said.