Heat waves, high base take toll on car sales in May

Car dispatches to dealers rose moderately in May, as India's automobile market enters a period of seasonally slow sales. During the month, wholesale shipments grew a modest 4.4% to cross 350,000 from a year earlier, data released by manufacturers showed.

As intense heat waves in May kept potential buyers at home and the nation got busy with the general election, retail sales fell from April, but were flat from a year earlier. The moderation is somewhat expected, coming after two consecutive years of record sales in FY24 and FY23.

“This year, the growth in (passenger vehicle sales) will not be very high. There will be a single-digit growth only, because the base effect has come in. And the second is that the elections and the scorching heat have impacted overall sales in May,” said Partho Banerjee, executive director, sales and marketing, Maruti Suzuki, India's largest carmaker.

Also read: Slashed subsidies to cause e-two-wheeler sales to ebb

Two-wheelers in slow lane

Meanwhile, electric two-wheeler registrations plunged 27% from a year earlier to 76,808 units, as last May had seen heavy pre-buying ahead of a planned reduction in subsidies from 1 June. However, e-two-wheeler registrations were nearly 18% higher in May compared to April, as sales in April once again took a hit due to the government's decision to further slash EV subsidies under its new Electric Mobility Promotion Scheme (EMPS).

The overall two-wheeler segment saw a 4.5% annual increase in registrations in May. TVS Motor Co. reported a 7% pick-up in domestic dispatches, while Hero MotoCorp, the country's largest two-wheeler maker, saw an over 5% drop in domestic wholesales to 4.9 lakh units.

Hyundai Motor India, the second-biggest carmaker in India in terms of volumes, said sports utility vehicles (SUVs) made up 67% of its total domestic sales in May, remaining its strongest growth driver.

Also read: Rural India drives passenger vehicle sales record in FY24

'Green shoots'

"With the upcoming monsoon and festive season, the passenger vehicle market is expected to follow traditional seasonal patterns. At Hyundai, we plan to continue focussing on rural strategies and enhance our infrastructure to maintain good growth," Tarun Garg, chief operating officer, Hyundai Motor India said.

Maruti Suzuki, the leader in India's car market, is hopeful of seeing green shoots in sales once the election results are announced and a stable government is formed. "I think things will turn around then", Banerjee added.

Passenger vehicle dealers now expect vehicle stocks to swell in June. “We are seeing a build-up in inventory, especially for entry-level SUVs and some other models for which we usually expect high demand ," a dealer said on condition of anonymity.

Also read: Dealers wilt as car buyers shun heat

Discount season

Tata Motors, Hyundai Motor India, Maruti Suzuki and Mahindra have raised discounts on several models and variants, the dealer cited above added. “All brands have increased discounts in May compared to March. Discounts have gone up by as much as 30% in some cases," the dealer said.

“Discounts on our top-selling models are up versus March. The net effect of OEM discounts as a contribution to sales is up by 5% approximately", a Maruti Suzuki dealer said, adding discounts on some slow-moving models have been dialled down.

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