Speed bump: Domestic passenger vehicle sales slip amid inventory pile-up

But two-wheeler market roars ahead with strong growth figures

This report has been updated

Domestic passenger vehicle (PV) wholesales for top carmakers Maruti Suzuki India (MSIL), Tata Motors, Hyundai Motor India (HMIL), Mahindra & Mahindra (M&M), and Toyota Kirloskar Motor (TKM) fell by 1.6 per cent year-on-year (Y-o-Y) to 304,381 units in July. This decrease occurred as carmakers had to rationalise dispatches amid high dealer inventories.

Sales for TKM and M&M, however, rose by 42.25 per cent and 15 per cent, respectively, while MSIL, Tata Motors, and HMIL saw declines of 9.6 per cent, 6 per cent, and 3.3 per cent, respectively. In July, rating agency ICRA reported that inventory holding at PV dealerships increased to 62–67 days (compared to an average of 30–35 days) as of June 2024.  

 

According to the Federation of Automobile Dealers Associations, this rise was due to steady production and a slowdown in retail sales due to extreme heat and the Lok Sabha elections impacting retail footfall.

“Inventory levels are expected to remain elevated in the near term, impacting dealership margins,” ICRA added.

MSIL, the country’s largest PV player, saw its wholesales fall to 137,463 units, down 9.67 per cent. Sales in its utility vehicle segment dropped from 62,049 units in July 2023 to 56,302 units in July 2024, while sales of its mid-sized sedan Ciaz fell sharply from 1,348 units last July to 603 units this year. The mini segment cars (Alto and S-Presso) remained resilient at 9,960 units, although sales of compact segment cars (Baleno, Celerio, Dzire, Ignis, Swift, and WagonR) fell by 12.5 per cent.

Tata Motors sold 44,725 units in July, including electric vehicles (EVs), as demand for fleet cars declined with the discontinuation of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme.

Speaking on the rise for Mahindra, Nalinikanth Gollagunta, CEO - Automotive Division, Mahindra & Mahindra stated “With the increased preference for SUVs, we continue to be the trusted SUV brand of choice for many car buyers. The recent successful launch of XUV3XO coupled with targeted portfolio interventions on XUV700, SCORPIO-N has made the portfolio even more appealing as borne out in this month’s sales numbers. M&M has a compelling portfolio of authentic & sophisticated SUVs crafted with deep passion and strong legacy.”

Tata Motors Group Chief Financial Officer P B Balaji noted in a media call after results on Thursday that some degree of slowdown was evident in both the internal combustion engine and EV segments.

Elevated inventory levels at PV dealerships led to a sharp increase in discounts in 2023-24.

“While discounts were higher on slow-moving models, original equipment manufacturers and dealerships have now started offering discounts on a few high-demand models as well to ensure a stronger booking pipeline,” ICRA observed.

Domestic PV sales for HMIL decreased by 3.33 per cent Y-o-Y to 49,013 units in July. Sport utility vehicles (SUVs) accounted for 66.6 per cent of HMIL’s domestic sales in 2024, with the new Hyundai Creta achieving sales of 100,000 units until July 2024, since its launch in January 2024.

M&M’s overall PV sales increased by 15 per cent Y-o-Y, reaching 41,623 units in July compared to 36,205 units last year.

Toyota achieved its highest-ever monthly sales, with domestic sales reaching 29,533 units in July, marking a 42.25 per cent increase Y-o-Y compared to 20,782 units sold in July 2023.

“Demand for all our models remains at an all-time high, especially in the SUV and MPV (multi-purpose vehicle) segments. Our strong presence in these categories provides robust options for customers,” stated Sabari Manohar, vice-president of TKM.

Two-wheeler sector shifts into high gear

In contrast, two-wheeler sales continued their strong performance with double-digit growth. Among major players, Honda Motorcycle & Scooter India reported domestic sales of 439,118 units, reflecting a 41 per cent Y-o-Y growth, attributed to network expansion and reaching sales milestones in South India.

Bajaj Auto also saw a 19 per cent increase in sales, reaching 168,847 units compared to 141,990 units sold last year.

TVS Motor Company’s domestic two-wheeler sales grew by 8 per cent, increasing from 235,230 units in July 2023 to 254,250 units in July 2024.

Two-wheeler sales have revived as rural sentiments improve due to favourable monsoons.