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Waning demand, high base effect pull down car sales

The industry is now pinning hopes on new launches, a normal monsoon and a favourable election outcome to generate fresh demand and push sales growth numbers higher.

Honda Cars APNEW DELHI: Impacted by waning pent-up demand over a very high base, passenger vehicle (PV) wholesales are estimated to have grown by a meagre 1.50% year-on-year in April 2024 to about 340,000 units. Sales of the three top players – Maruti Suzuki (MSIL), Hyundai Motor (HMIL) and Tata Motors – barely managed to remain in green last month.

“The relatively subdued growth partly stems from waning pent-up replacement demand, which supported the industry over the past couple of years, and also the effect of a higher base,” said Srikumar Krishnamurthy, Senior VP & Co-Group Head – Corporate Ratings, ICRA Limited.

“The domestic PV industry reached an all-time high volume of 4.2 million units in FY24, with retail sales being aided by healthy replacement demand. Even as the underlying demand drivers remain supportive, the volume growth for the PV segment is likely to moderate to 3-6% (from an elevated base) during FY2025,” added Krishnamurthy.

The industry is now pinning hopes on new launches, a normal monsoon and a favourable election outcome to generate fresh demand and push sales growth numbers higher. The country’s largest carmaker Maruti Suzuki’s (MSIL) domestic PV sales stood at 137,952 units in April 2024 compared to 137,320 units sold in April 2023 – a flat growth. This is a big slump sequentially given the carmaker had sold 152,718 units in March 2023.

MSIL sales were lifted by the utility vehicle segment as demand for its mini and compact cars continued to remain under tremendous pressure. The carmaker is now betting big on the new Swift to revive its fortune in the compact segment.

Hyundai Motor India (HMIL) registered total sales of 63,701 units (Domestic 50,201 units and exports 13, 500 units) in April 2024, posting a YOY growth of 9.5%. HMIL’s domestic sales, however, grew by just 1% YoY to 50,201 units last month.

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