The car sales market in India, which had been thriving for nearly three years, is now facing a challenging period. Demand has dwindled over the past few months due to various factors such as a high base, a severe summer heatwave, political uncertainty, and expensive vehicles.
Despite a strong recovery post the initial Covid setback, with record sales of 41.1 lakh units in 2023, the market has recently witnessed a decline in demand. This trend has raised concerns about the possibility of low to flat growth for the entire year.
In June, top carmakers Maruti and Hyundai reported weak growth in dealer deliveries. Maruti, with its new-gen Swift model, saw a modest 3% increase, while Hyundai remained flat at 0.2%. However, Tata Motors, known for its remarkable comeback in recent years, experienced an 8% decline in dealer deliveries. The company, which offers a strong lineup of electric vehicles alongside petrol and diesel variants, sold 43,624 units to dealerships compared to 47,359 units in the same period last year.
On the other hand, Mahindra and Toyota reported positive dispatches, largely attributed to pending consumer delivery backlog. Shailesh Chandra, MD of Tata Motors’ Passenger Vehicles and Electric Mobility Divisions, highlighted a boost in demand in April but noted a decline in retail sales in May and June due to elections and heatwave. Consequently, the company has readjusted wholesales to manage channel inventory.
Chandra also mentioned the impact of fleet sales in Q4FY24 due to the expiry of FAME II subsidy, leading to a decline in the fleet segment. While personal segment retails showed slight growth, the industry expects a recovery in the coming quarters, especially with the festive season around the corner. Partho Banerjee, Senior Executive Officer (Marketing & Sales) at Maruti, acknowledged high inventory levels but expressed optimism about potential ‘green shoots’ with the onset of monsoon and expectations of normal rainfall.
The industry anticipates flat sales for 2024, with hopes of a gradual recovery as the festive season gains momentum. Despite the current challenges, there is optimism for a turnaround in the market in the near future.
