Motown spreads Christmas cheer with best deals in 5 years

According to industry estimates, about 335,354 cars, sedans and utility vehicles were dispatched from factories to dealerships last month, an increase of 3.9% over 322,600 units sold in the same period last year. Industry numbers were supported by market leaders Maruti Suzuki and Hyundai Motor India which reported a growth of 1.3% (134,158 units) and 3.1% (49,451 units), respectively last month.

Sales of cars, sedans, and utility vehicles in the local market reached over 300,000 units for the sixth consecutive month, with a growth rate of 1.9% in June. Industry estimates indicate that around 327,700 units were sold last month, contributing to the record-breaking sales of over 2 million passenger vehicles in the first half of the year. Maruti Suzuki reported an 8.4% increase in wholesale volumes, while Hyundai experienced a 2% growth in sales.

Maruti Suzuki and Hyundai, the leading carmakers in the country, are set to achieve their best January sales driven by strong consumer demand, particularly for SUVs. Industry estimates suggest that over 375,000 vehicles will be dispatched this month, an increase of more than 8% compared to January 2023. The share of SUVs in the domestic market is expected to grow to 52-53% this year. The preference for SUVs has led to an increase in the average selling price of passenger vehicles in India. Maruti Suzuki and Hyundai are confident about the continued demand for the rest of the quarter.

Small cars may emerge as a viable option for car buyers in the long run, said a top executive at market leader Maruti Suzuki, which also sells the highest number of small cars in India.

Luxury car sales were at record levels in the first half of 2023. Should the trend continue, the industry could log an all-time high for the full year. What explains this frenzy, who are the major benefactors and how long will it sustain? Mint takes a look:

Last month, carmakers reported a 4.4% rise in dispatches from factories at 287,904 units, the highest on record for December. Retail sales were substantially higher at 442,800 units, according to industry estimates, helping bring stocks down. The industry started the new year with an inventory of 176,500 units.

Carmakers in India are forecast to face a record stockpile of 400,000 vehicles worth ₹44,000 crore by the end of May, as demand cools after a three-year run of high sales. Passenger vehicle registrations are expected to fall by 5% in May from a year earlier, due to election-related uncertainties, the completion of marriage season, and heat waves in key markets, particularly Delhi NCR.

India's passenger vehicle shipments increased by 12.9% YoY to 331,747 units in April, with all automakers stepping up supplies to dealerships. However, the limited availability of semiconductors affected the production operations of Maruti Suzuki. Retail sales of passenger vehicles marginally grew by 3.5% YoY to 285,700 units during the month. While Maruti Suzuki reported robust increasing volumes in April, its sales were constrained due to a shortage of electronic components that affected deliveries. Despite an increase in enquiry levels following the introduction of new SUV models, concerns remain over inflation and the possible weakening of consumer sentiments due to less favourable monsoon rains.

Maruti has over 40% market share in the passenger vehicles (PV) segment. In 2022-23, Maruti sold a total of 1.96 million vehicle.

The fall in sales of small cars and the rise in SUV sales may not be only due to Indians now ditching small cars and preferring to buy SUVs. Due to several factors, carmakers are focusing more on SUVs, making them affordable even if they have to downsize them in different respects, just as small-car segment crumbles under stress.