Seasonal factors such as Shraddh and Pitrapaksha, along with excessive rainfall and a sluggish economy, reduced passenger car retail sales by 19% in September. This resulted in record high inventory levels for dealers, reaching 80-85 days - equivalent to 790,000 automobiles worth Rs 79,000 crore, according to the Federation of Automobile Dealers Associations' (FADA) monthly data released on Monday.

With the key Christmas season approaching, FADA has asked original equipment manufacturers (OEMs) to take urgent remedial action to minimize financial losses. It also asked the Reserve Bank of India to provide an advise to banks imposing tougher channel funding procedures based only on dealer permission and genuine collateral, to keep dealers from suffering further financial strain owing to unsold inventories. "This is the final opportunity for OEMs to recalibrate and support market recovery before it's too late," said C S Vigneshwar President at FADA.

Overall retail sales fell by 9.26 percent in September, with all categories except three-wheelers and tractors down sharply compared to the same month last year. Two-wheeler and commercial vehicle sales fell by 9 percent and 10.45 percent, respectively, amid a considerable drop in passenger car sales. Three-wheeler sales increased by 0.66 percent, while tractor sales increased by 15% in the same month.

Among carmakers, Maruti Suzuki witnessed a 20% dip in sales to 1,41,318, while Hyundai Motor India fell 25% and Tata Motors fell 19%. Among the top four players, Mahindra & Mahindra recorded a 0.4% increase, displacing Tata Motors as the number three player.

"Despite festivities such as Ganesh Chaturthi and Onam, traders have reported rather flat performance. This shows that general market sentiment has been dismal throughout these holiday times, with a trend toward flat or negative growth," Vigneshwar stated. Three-wheeler sales increased by 0.66 percent, while tractor sales increased by 15% in the same month.

Among carmakers, Maruti Suzuki witnessed a 20% dip in sales to 1,41,318, while Hyundai Motor India fell 25% and Tata Motors fell 19%. Among the top four players, Mahindra & Mahindra recorded a 0.4% increase, displacing Tata Motors as the number three player.

"Despite festivities such as Ganesh Chaturthi and Onam, traders have reported rather flat performance. This shows that general market sentiment has been dismal throughout these holiday times, with a trend toward flat or negative growth," Vigneshwar stated.

"The Shraddh season had a negative influence on sales, resulting in a year-over-year fall in retail sales across several categories. Discounts and incentives have been implemented across categories to boost demand, but they have yet to result in a major increase in sales," he noted.

According to FADA, the near-term view for car retail is cautiously hopeful because both Navratri and Diwali happen in the same month, enhancing hopes of an increase in vehicle sales. "With good water levels in reservoirs and better crop yields boosting rural demand, the festive season is likely to generate a significant increase in two-wheeler, passenger car, and tractor sales, with new launches scheduled for the month. However, the passenger car industry confronts a grave position due to excessive inventory levels of dealerships," Vigneshwar said.

If sales do not increase as projected in October, dealers may face substantial financial strain as unsold inventory accumulates in their warehouses. While dealers and OEMs anticipate strong holiday sales, particularly in rural regions where good cash flow and improved agricultural circumstances are likely to boost demand, the outcome is unpredictable.