Car sales seen zipping past demand woes to hit record

The country's largest passenger vehicle maker raced ahead of home grown automaker Mahindra & Mahindra in the fast-growing segment with sales of 42,620 units last month. Mahindra sold 36,205 units, while Hyundai Motor India was next at 32,991 units.

Manufacturers are trying to balance supply and demand given that customers can't buy the models they want and there are discounts on others. This has led to the estimate of PV sales this month being cut to 310,000 units from 350,000 earlier.

Automakers expect to close the year with sales of 4.10-4.17 million cars, utility vehicles and vans - 8-10% more than 2022 compared to the earlier estimate of about 0-6% growth - despite the high base of last year when sales had grown by 23% to 3.79 million units, several senior executives told ET. Better-than-expected demand for sports utility vehicles (SUVs) at the more premium end of the market is driving the sales, they said.

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.

Sales of SUVs and multi-purpose vehicles (MPVs) exceeding 4 metres in length now make up at least 10% in volume terms even at compact-car makers such as Maruti Suzuki. The share of sub-4 metre vehicles, which enjoy policy preference from a taxation standpoint to encourage car ownership, has shrunk 6 percentage points in three years to 72%.

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.

Mercedes-Benz said it now expects up to 50% of sales by the end of the decade to come from electrified cars. The carmaker has long said it was preparing for all-electric sales by 2030, but Chief Executive Ola Kaellenius cautioned towards the end of last year that even Europe would likely not be ready by then.

The company, which has commenced work to double its production capacity, is in the process of setting up its largest manufacturing facility with total installed capacity of 1 million units at Kharkhoda, Haryana. The board has additionally approved establishment of a factory for another 1 million units, the site for which is yet to be finalised by Maruti Suzuki.

Around 375,000-380,000 cars, sedans and utility vehicles are expected to be sold in India in March, up from 336,000 units a year earlier, making it the 15th consecutive month that PV sales have breached previous monthly records. For the first time, sport-utility vehicles are set to capture more than half of the passenger vehicle market in a year underscoring their growing popularity.

According to industry estimates, Indian carmakers are set to ship more than 675,000 vehicles in the fiscal year that ends March 31, recovering from a low of 404,000 reported in the aftermath of the pandemic in FY21. Around 663,000 cars were exported from the country in the last financial year. Vehicle exports were dominated by Maruti Suzuki and Hyundai, which together accounted for two-thirds of all cars shipped out of the country.