Festive Season Boosts India’s Automotive Sales in October, Eases Inventory for Automakers

October proved to be a month of revival for India’s automotive sector, with festive cheer around Diwali and Dhanteras fueling a significant spike in vehicle sales. After a challenging year marked by subdued demand, the holiday season brought a notable lift, boosting retail sales of passenger vehicles (PVs) by nearly 20% year-on-year, according to industry estimates.

Surge in Retail Sales, Controlled Wholesale Dispatches

Automakers were quick to respond to the surge in festive demand, although they maintained a cautious approach to wholesale dispatches to avoid excessive inventory. Partho Banerjee, Senior Executive Director of Maruti Suzuki India (MSI), reported an all-time high retail figure of 202,402 units for October. This push allowed Maruti Suzuki’s dealer stock to drop to a comfortable one-month level, implying that dealerships could clear out their inventory within a month. Maruti also managed to reduce its factory stock close to zero, a move that aligns with its strategy to streamline inventory amid fluctuating demand.

Among Maruti’s top performers was the Brezza compact SUV, leading with 24,237 units sold, followed closely by the new Swift (22,303 units) and WagonR (21,114 units). Despite a general slowdown in hatchback demand, WagonR performed “exceptionally well,” Banerjee added.

Mixed Wholesale Dispatch Results Among Automakers

Maruti Suzuki saw a slight dip of 2.3% in domestic wholesales, while Tata Motors and Hyundai reported a 0.4% decline and a marginal 0.8% increase, respectively. Conversely, Mahindra & Mahindra and MG Motor India posted robust increases of 24% and 31%, as they pushed new models into dealerships. Toyota Kirloskar Motor led the pack with a remarkable 41% surge in wholesale dispatches.

Broader Context and November Outlook

Although October’s retail numbers were encouraging, experts remain cautious about the sector’s overall trajectory. Jay Kale, Executive Vice-President at Elara Capital, highlighted that while October retail growth for PVs was around 8% and for two-wheelers approximately 12%, November could see more tempered wholesale growth. He stressed that a full assessment requires examining trends from September through December, given the seasonality and broader market influences.

Easing Bottlenecks, Lingering Challenges

This festive season’s strong performance contrasts with last year when the industry grappled with shortages and supply chain issues, notably in semiconductor availability. Though supply chain challenges have eased, the sector still faces hurdles, including weather impacts and pre-election uncertainties affecting consumer spending. Banerjee noted that Diwali and Dhanteras sales were “much, much better” than last year, despite external pressures from extreme weather conditions and fluctuating demand earlier in the fiscal year.

Banerjee estimated total October retail sales across the market to be between 470,000 and 490,000 units, up from 390,000 units in the same month last year—a 20-21% growth that signals strong, though potentially short-lived, demand momentum.

Key Takeaways:

   •       Festive season demand boosted PV retail sales by ~20% in October.

   •       Automakers managed inventory by keeping wholesale dispatches stable.

   •       Top-selling models included Maruti’s Brezza, Swift, and WagonR.

   •       Broader challenges persist, and November may see softer wholesale growth.

   •       Total retail sales in October are estimated between 470,000-490,000 units.