Guwahati: Maruti Suzuki India, India's largest automaker, shares were in the limelight during Wednesday's trading session, advancing close to 1 percent intraday to a high of Rs 12,560 per piece. The advance came despite the company's weakest monthly dispatches to dealers since December 2023.
In a filing with the regulator on Tuesday, Maruti Suzuki announced its overall domestic passenger vehicle (PV) sales came down 13.3 percent year-on-year (YoY) in June to 1,18,906 units from 1,37,160 units in the same month a year ago. The drop was led mainly by soft urban demand and a steep fall in the small car category, the company's core strength.
Rahul Bharti, a Senior Executive Officer at Maruti Suzuki India, described the larger trend: "The weakening of passenger vehicle sales is essentially because of a steep fall in the smaller segment vehicles. Traditionally, PV sales would increase at 1.5 times GDP growth. However, even with 6.5 percent GDP growth, the market is practically flat because of unaffordability in the small car segment."
Retail sales of budget cars plunged by 32 percent in June, following a longer-term pattern that has caused demand within this segment to drop more than 70 percent since 2019. Tighter regulatory needs and increased input expenses have driven prices of mini vehicles higher, impacting affordability among first-time drivers.
ALSO READ: Delhi HC Grants Amazon Relief in Rs 340 Crore Trademark Case against Beverly Hills Polo Club
Other segments also saw drops. Sales of compact cars, such as Baleno, Swift, and WagonR dipped 15 percent, while utility vehicle despatches declined 7.71 percent YoY.
Even as domestic operations struggled, Maruti Suzuki's export performance was robust. The company exported 37,842 units overseas in June, a 22 percent YoY increase, even as the world economy was facing uncertainties.
The decline in domestic demand has also reflected on production. Production, in June 2024, was 7,097 mini cars (S-Presso and Alto) compared to 10,133 units in June last year. The total production was at 1,27,545 units during the month, against 1,33,095 in June 2023.
While India posted record car sales of 4.3 million units in FY24 piloted by a spurt in SUV demand analysts indicate that overall growth is still lacklustre and may remain under stress in FY25 owing to persistent affordability concerns, waning post-COVID demand, and a high base factor.
Industry predictions indicate passenger car sales could increase only by 1 percent –2 percent during the current year. Yet, analysts are optimistic that policy support in the form of possible income tax relief and rate cuts by the Reserve Bank of India could recharge consumer sentiment and turn the sales spurt in subsequent quarters.
FIRST Business Portal addressing the potential of business capability of North East Region.
