Passenger vehicle sales race to new high, GST mop-up above Rs 1.6 trillion

Ahead of the peak festival season, the figures for domestic passenger vehicle (PV) sales and goods and services tax (GST) collection suggested a healthy macroeconomic scenario prevailing 

in the country. 

While the monthly PV wholesales number at 363,733 units in September was a record high, the GST mop-up at Rs 1.62 trillion, up 10.2 per cent year-on-year (Y-o-Y), was the third highest. The average monthly gross GST collection at Rs 1.65 trillion in the first six months of 2023-24 was 11 per cent higher than in H1FY23.

UPI transactions, too, breached the 10 billion mark for a second consecutive month, but the 10.56 billion count was slightly lower than in August; the value of such transactions at Rs 15.8 trillion, however, was marginally higher.

The monthly domestic PV wholesales number showed a 2.36 per cent increase Y-o-Y. This uptick could be attributed to the onset of the festival season, improved chip availability leading to increased production, and a significant demand for SUVs (sports utility vehicles). The previous peak in domestic PV sales was 360,897 units in August this year.

During the first half of FY24, the overall PV wholesale figure breached the 2 million mark — a first in H1 of any financial year.  Shashank Srivastava, senior executive officer (marketing and sales) at Maruti Suzuki India, told reporters  about the key role the festivals played in the surge in PV sales.

While the month saw Ganesh Chaturthi and Janmashtami in western India, the auspicious Chingam month in Kerala  ended on September 17. 
 

Srivastava noted that year-on-year growth in September appeared somewhat “muted” primarily due to the substantial base effect. He explained that the figure for September 2022 was notably high at 355,353 units.

Currently, the retail channel, particularly in the northern, eastern, western, and central regions of the country, is stocking up for increased sales during Navratri and Diwali.

PV retailers have about 30 days of stock right now. “This is, of course, pretty high. We observed this level of stocks about five years back. But volumes were less at that time,” Srivastava mentioned. The senior MSIL executive stressed that the current stock levels were not a source of worry because the build-up was there because of the festival season.

Srivastava also mentioned that most manufacturers have successfully navigated the semiconductor shortage issue, leading to a significant increase in SUV production. This was a challenge faced by several manufacturers, including Maruti Suzuki, particularly during the earlier months until July. The SUV segment has witnessed the fastest growth for several quarters in India.

In the first half of FY24, the auto industry’s PV sales stood at 2.072 million units. “This is the first time that the two million number has been cracked in H1 of any year,” he mentioned. Last year’s H1 sales stood at 1.937 million.

In the January-September period of 2023, the auto industry’s PV sales stood at 3.091 million units. “This is the first time that the 3 million number mark has been crossed in the January-September period…This means we are on course to reach the 4 million mark, both for financial year and calendar year,” Srivastava further said.

Maruti’s domestic PV sales jumped by 1.64 per cent Y-o-Y to 150,812 units in September. Hyundai, India’s second-largest carmaker, saw its sales figure jump by 9.48 per cent Y-o-Y in September.

Tarun Garg, chief operating officer (COO) of Hyundai Motor India, stated that the company achieved its “highest ever” monthly sales in the country in September since its inception. “The ongoing festival season has resulted in strong sales momentum… Our robust SUV portfolio has received a further boost with the exceptional customer response to the newly launched Hyundai Exter. SUVs now contribute to more than 65 per cent of our domestic sales,” he said.

Tata Motors, on the other hand, reported a decrease of 5.32 per cent Y-o-Y in its PV sales in September. It launched the new generation Nexon (internal combustion engine-based) and Nexon electric vehicle (EV) in Q2FY24.

Shailesh Chandra, managing director of PV and EV business at Tata Motors, in a statement, said: “We proactively reduced supplies of the outgoing models this quarter to enable a smooth transition to the new generation models.” He expects stepped-up volumes in this festival season and beyond with deliveries commencing for their new-generation products.

Tata Motors, India's third-largest PV maker, reported that its PV sales decreased by 5.32 percent year-on-year in September. Tata Motors launched the new generation Nexon (internal combustion engine-based) and Nexon electric vehicle (EV) in Q2 of FY24. "We proactively reduced supplies of the outgoing models this quarter to enable a smooth transition to the new generation models. Going forward, with deliveries commencing for our exciting new generation products, we expect stepped-up volumes in this festive season and beyond," Shailesh Chandra, Managing Director of PV and EV business at Tata Motors, said in a statement.

Mahindra & Mahindra’s car sales surged by about 20 per cent Y-o-Y in September. Veejay Nakra, president of the automotive division at M&M, said the company recorded its "highest ever" sales of SUVs for a third consecutive month. “While demand for our key SUV brands remains strong, we are closely monitoring the availability of semiconductors and select components to meet the strong festival season demand,” he further said.

Som Kapoor, automotive partner at EY Parthenon, told Business Standard that robust demand prevails in the market, and with the festival season just around the corner, the outlook is “exceptionally” positive. “Bookings are abundant in the marketplace, and there is palpable excitement about converting these reservations during the festival period,” he noted.

"However, we must keep a close eye on dealer inventory levels, particularly during the first 15 days of October, a period traditionally considered less auspicious for purchases. There may be some temporary constraints on working capital as we work to bolster inventory levels. Nonetheless, with the industry’s commitment to managing this challenge, we are poised for an outstanding year, potentially achieving our best-ever performance in passenger car sales,” he added.

With inputs from Shrimi Choudhary and Shine Jacob