Wedding season sparks 2-wheeler boom but passenger vehicles hit the brakes

As passenger vehicle retail sales slowed in November, companies are anticipated to maintain high discount levels to attract buyers

The ongoing wedding season and improving rural demand are expected to sustain the growth momentum for two-wheelers in the coming months, according to a note by HSBC released on 3 December.

 

However, the brokerage firm’s note, accessed by CNBC-TV18, projects a more subdued outlook for passenger vehicles (PVs) and commercial vehicles (CVs), with demand in these segments likely to remain muted.

 

Passenger vehicles: Discounts expected amid weak demand

 

HSBC reported that passenger vehicle retail sales slowed in November. Inventory levels increased slightly, from six to seven weeks in October to seven to eight weeks in November. As a result, companies are expected to maintain high discount levels to attract buyers.

 

The brokerage estimates a slight decline of 0–2 per cent in domestic PV wholesales for FY25. Maruti Suzuki recorded a 10 per cent year-on-year increase in overall volumes, driven by a 5 per cent rise in domestic sales and a 25 per cent surge in exports.

 

While Maruti Suzuki’s domestic car sales fell by 4 per cent, its utility vehicle sales grew by 20 per cent. Mahindra & Mahindra reported a 16 per cent growth in SUV sales, with over 46,000 units sold in November. Tata Motors saw a modest 2 per cent increase in PV volumes, supported by a 9 per cent rise in electric vehicle (EV) sales.

 

Two-wheelers: Strong demand momentum

 

The two-wheeler segment remains optimistic, supported by rural demand and seasonal factors such as the marriage season. TVS Motor Company recorded an 11 per cent year-on-year increase in sales, including a 6 per cent rise in domestic volumes and a 34 per cent growth in exports.

 

Similarly, Bajaj Auto’s domestic sales declined by 7 per cent, but exports surged by 26 per cent. Hero MotoCorp and Royal Enfield experienced declines in domestic sales, down by 8 per cent and 4 per cent, respectively.

 

Commercial vehicles: Recovery expected in 2025

 

In the CV segment, dealers anticipate some recovery starting in January 2025. However, demand for FY25 is expected to remain flat, attributed to limited cash flow improvements from government infrastructure projects.

 

November sales showed a 2 per cent year-on-year decline for major original equipment manufacturers (OEMs). Subsegments like light commercial vehicles (LCVs) and medium and heavy commercial vehicles (MHCVs) recorded a 5 per cent decline, while bus sales grew by 37 per cent. Tata Motors’ truck sales fell by 5 per cent, and Ashok Leyland’s total CV volumes dropped by 4 per cent.

 

Emerging trends in electric vehicles

 

Electric vehicle (EV) sales presented a mixed picture in November. Electric two-wheeler penetration fell to 4.5 per cent from the previous month, with 119,000 units sold. Ola Electric’s market share dropped to 25 per cent, while TVS and Bajaj Auto captured 25 per cent and 22 per cent, respectively.

 

In contrast, EV four-wheelers achieved their highest-ever penetration of 2.2 per cent. Tata Motors retained a dominant market share of 49 per cent despite a slight decline, while MG Motors improved its share to 37 per cent.

 

Tractor sales and rural demand

 

Tractor sales received a boost in November, with dealers expecting stronger demand in March and April. This optimism is driven by higher reservoir levels and improving rural cash flow, which are expected to further support the agricultural sector.

 

HSBC’s analysis highlights varied trends across segments, with two-wheelers and EV four-wheelers demonstrating resilience, while passenger and commercial vehicles face persistent challenges.