 "Cars")
Automakers feel that the adoption of cleaner fuels will also drive sales. (Representational Photo)
Passenger vehicle sales, which have been on a slower growth trajectory so far this financial year, are likely to end the 2024-25 fiscal on a flat note, feel industry insiders.
While OEMs are upbeat on the upcoming festive season sales, analysts peg the overall growth in PV sales for FY25 to be flat at 0.8 percent or so.
Shailesh Chandra, MD, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility said that he expects the year to end with a 2-3 per cent overall growth in PV retail sales over the 4.2 mn units (highest ever) last year.
Chandra says that the second half of the year would see growth led by festival season. So far, there has been no significant change in any of the macro-economic factors that affect auto sales – be it GDP growth projection, interest rates, or inflation. “Rural demand is back riding on good monsoon sentiments. Enquiry levels at dealerships are also stable,” he adds.
Chandra says that realistically a 2-3 percent year on year growth over last year’s 4.2 mn units is possible in 2024-25. “H2 will have the burden of defining auto sales growth for this fiscal as H1 has been largely flattish. Even if there is a 10 percent growth in sales in H2FY25, overall annual sales growth would work out to be around 5 percent or so,” he told Business Standard.
“Data from Jato Dynamics clearly illustrates the cooling trend in the automotive market following the post-pandemic rebound. After a strong 26.8 per cent year-over-year growth in FY 2023, we’ve observed a significant slowdown. Growth moderated to 8.7 per cent in FY 2024, with projections indicating a mere 0.8 per cent increase for FY 2025,” said Ravi Bhatia, President and Director, Jato Dynamics.
Market leader Maruti Suzuki India feels that the festive season holds promise. “We have achieved the highest total sales in Q1 of any year in our company’s history. Coincidentally, this would also be highest in the Indian automobile industry. The coming festive season promises to bring new opportunities. Budgetary announcement to strengthen road network and infrastructure is a boost to our enthusiasm,” said Partho Banerjee, Senior executive officer, Marketing & Sales, MSIL.
Banerjee added: “As a market leader our efforts are to charge up customer interest across all segments. Launch of the Epic New Swift and introduction of Dream Series Limited Edition models of Celerio, Alto K-10 and S-Presso, and Ignis Radiance edition are generating good customer interest.”
SUV maker Mahindra and Mahindra feels the SUV segment would grow in mid to high teens. “At M&M we expect SUV growth in the mid to high teens in FY25. We have had a successful 3XO launch and are excited with the upcoming Thar Roxx soon and that should keep the momentum on,” Rajesh Jejurikar, executive director and CEO, Auto and Farm sectors, M&M told Business Standard.
As such automakers feel that the adoption of cleaner fuels will also drive sales.
Banerjee, for example, said that their CNG portfolio (14 models) continues to draw customers. “In Q1 30 per cent of our sales was of CNG variants. We are trying to further increase production to meet the high demand for CNG variants,” he said.
Similarly, Chandra felt that demand from fleet operators for EVs is going to be back in the second half. The discontinuation of the FAME subsidy scheme had impacted fleet sales. “Customers preponed sales (in Q4Fy24) and now they are postponing sales. So Q1FY25 has seen this impact. But once clarity on the subsidy arrives, the demand is going to be back,” he said.
As such a larger trend, customers are slow in buying both ICE and EV cars, and enquiry to retail is taking longer.
“This deceleration is further emphasized in our 4-month analysis. The April-July period shows a stark contrast in growth rates, dropping from 33.2 percent in 2022 to 8 percent in 2023, and further down to just 2 percent in 2024,” Bhatia told Business Standard. See chart.
These figures suggest that the initial pent-up demand and supply chain recovery that drove the post-Covid sales surge has largely played out. The industry now faces more normalised market conditions, potentially coupled with economic headwinds that are tempering consumer demand for new vehicles.
“As we move forward, automakers and dealers may need to adjust their strategies to navigate this cooler market environment, focusing on efficiency, innovation, and value propositions to maintain growth in an increasingly challenging landscape,” Bhatia added.
First Published: Aug 11 2024 | 2:44 PM IST
