Car sales lose pace in June, SUVs stay in front

Passenger vehicle sales in India stayed in the slow lane for the third straight month in June mainly due to a high base and easing of post-pandemic pent-up demand. June sales rose 3.7% from a year earlier but fell marginally from May. As per industry estimates, 340,784 cars, sedans and utility vehicles were sold last month compared to 328,710 units a year earlier.

Carmakers attributed the modest sales growth to tapering off of pent-up demand, which started post pandemic and sustained for the last two financial years, besides better availability of vehicles with the easing of semiconductor shortage issue. SUVs contributed as much as 53% of sales.

Industry stakeholders said while the demand environment is positive thanks to forecasts of a normal monsoon and record kharif output, passenger vehicle sales this fiscal will likely grow in modest single-digits – by 4-6% – on a high base.

Automakers clocked bumper sales for two straight years lifted by pent-up demand, growing 8.4% to its highest-ever mark at 4.22 million units in FY24 and by 27% to 3.89 million units in FY23.

In June, market leader Maruti Suzuki posted a 3.1% increase to 137,160 vehicles. Partho Banerjee, senior executive officer (marketing and sales) at the company said, “There was a lull in sales due to the extreme heatwave and on account of the general elections. But now with the onset of the monsoons, forecast of a normal monsoon and record kharif output, we expect the momentum to pick up.”

The company has received an ‘encouraging response’ to its upgraded Swift hatchback, selling 35,815 units in less than two months of launch. There are pending orders for 164,000 units of the Swift, Banerjee said. At Korean rival Hyundai Motor India, domestic sales rose by a meagre 0.20% to 50,103 units. Tarun Garg, chief operating officer, said, “We closed H1 of CY2024 with an overall sales growth of 5.68%. SUVs have contributed strongly, accounting for 66% of our domestic sales.”Hyundai’s Creta SUV model was a key sales driver, touching 91,348 units in the first six months of 2024, an 11% growth over last year.

Sales at Mahindra & Mahindra (M&M) jumped 23% last month to 40,022 units but Tata Motors reported an 8% decline at 43,524 units.

Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility said, “In Q1 FY25, after a boost in demand in the first half of April, due to festivities in some parts of country, the passenger vehicle industry saw a decline in retails (registrations) in the months of May and June, influenced by the general elections and heat waves across the country.” The company readjusted wholesales in line with retails to keep channel inventory under control.

Chandra said the company foresees a recovery in demand as enquiries have remained strong despite weak retail sales in the past two months. “This strong enquiry pipeline, in addition to onset of festive season from August, augurs well for the industry. Tata Motors is fully geared up to leverage this growth opportunity on the back of strong demand for its SUV portfolio, especially Punch and Nexon, as well as new launches in the coming months,” he said.

Kia India recorded sales of 21,300 units in June, growing 9.8% compared to 19,391 units sold in June 2023. Sales at Toyota Kirloskar Motor grew over 44% to 25,752 units last month. JSW MG Motor India sold 4,644 units in the period under review.

Meanwhile, two-wheeler sales sustained its growth momentum on a low base. Chennai-based TVS Motor Company recorded 8% growth in domestic two-wheeler sales at 255,735 units last month, compared to 235,833 units in June 2023.

In the commercial vehicle segment, sales remained muted due to election-related uncertainties. Market leader Tata Motors posted an 8% drop to 30,623 units while Ashok Leyland reported a decline of 1% at 14,261 units last month.

Girish Wagh, executive director, Tata Motors, said, “Going forward, the forecast of a healthy monsoon, expectations of policy continuity and continuing thrust on infra related developmental projects by the government are expected to improve the demand for commercial vehicles. The demand in staff, intercity, and stage carriage segments should also remain healthy despite the seasonal dip often seen in school transportation in Q2.”

In the farm equipment sector, market leader M&M saw tractor sales expand by 6% to 45,888 units in June. “The government’s announcement of increased foodgrain production, an increase in MSP for major Kharif crops, and further advancement of the Southwest monsoon across the country brings positive sentiments with farmers. With retail momentum having picked up, supported by land preparation and an increase in Kharif crop sowing, demand for tractors is likely to remain strong in the upcoming months”, Hemant Sikka, president – farm equipment sector at M&M said.

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