NEW DELHI: After nearly three years of bumper growth, car sales have started to show signs of a severe weakness as demand has come down over the past few months on a high base and other negatives such as severe summer heatwave, uncertainty around elections, and expensive vehicles.
The Indian car market had bounced back strongly after the initial Covid setback and closed 2023 with record sales of 41.1 lakh units.However, the market has seen a squeeze in demand in the recent months, which many fear will mean low to flat growth for the full year.
The numbers in the month of June saw Maruti and Hyundai – the top two carmakers – report weak growth in dealerships deliveries. While Maruti, which recently launched the new-gen Swift, had a 3% growth in dealer dispatches, Hyundai – that is now preparing for an IPO – was flat at 0.2%.
But while the two managed to stay positive, Tata Motors – that had made a remarkable comeback in demand over the last few years – had an 8% decline in dealer deliveries. The company, which has a strong electric line-up apart from petrol and diesel versions, sold 43,624 units to dealerships against 47,359 units in the same month last year.
Mahindra and Toyota, however, had good dispatches, but perhaps more due to pending consumer delivery backlog.
Shailesh Chandra, MD of Tata Motors’ Passenger Vehicles and Electric Mobility Divisions, said after a boost in demand in the first half of April due to festivities in some parts of country, the industry has seen a decline in retails (registrations) in May and June due to elections and heat wave.
This has seen the company “re-adjust” wholesales to keep channel inventory under control. “The electric vehicles industry was affected by the broader industry trend and the impact of significant preponement fleet sales in Q4FY24, due to expiry of FAME II subsidy in March 2024. Consequently, while the personal segment retails have grown slightly, there was a sharp decline witnessed in the fleet segment, which is expected to recover in the coming quarters,” he said.
The industry is expecting that full-year sales will be flat in 2024, even though they expect some recovery as the festive season starts to kick in soon, Chandra said.
Partho Banerjee, Senior Executive Officer (Marketing & Sales) at Maruti, also said inventory levels are being monitored. “… we do feel that stocks are slightly higher as compared to the norm.” However, Banerjee said some ‘green shoots’ may begin to come up. “With the onset of monsoon and forecast of normal rains this year, we can expect more footfalls. Also, kharif sowing is going to be record high this year as per some reports. Thus,we are going to see the green shoots coming in the due course of time.”