Auto sales decline in August for second consecutive month

In August, sales of passenger vehicles in the Indian market experienced a decline for the second consecutive month, attributed to a high comparative base and car manufacturers reducing dispatches to better manage inventory levels at dealerships. Industry estimates indicate that approximately 350,000 to 355,000 cars, including sedans and utility vehicles, were dispatched from factories to dealerships last month. This represents a decrease of around 1.7 per cent to 3 per cent compared to the 361,123 vehicles sold in August 2023. It's important to note that automakers in India typically report wholesale dispatch figures rather than retail sales to end customers.

Despite this downturn, car manufacturers remain optimistic about robust demand in the upcoming festive season, particularly with Ganesh Chaturthi celebrations in Maharashtra starting on September 7 and Onam festivities in Kerala from September 16. Market leader Maruti Suzuki reported an 8.4 per cent drop in sales, totaling 143,075 units. Partho Banerjee, Senior Executive Officer for Marketing and Sales at Maruti Suzuki, explained, “We calibrated our dispatches with market demand to bring down stocks at dealerships. Our inventory in the channel has now decreased to 36 days from 38 days previously. We aim to maintain this level because reducing stocks further could affect vehicle availability and result in lost sales during the festive season”.

Banerjee also noted a positive response to their vehicles in Kerala, particularly since the onset of the Chingham month on August 17, with bookings increasing by 7 per cent in the state. He expressed optimism for retail sales to rise during Onam, stating, “Overall, our wholesale has aligned with retail sales in August, which is a good sign.” Currently, Maruti Suzuki has an order bank of 165,000 vehicles.

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In August, SUVs accounted for a significant 55 per cent of total passenger vehicle sales in the domestic market. Hyundai, too, reported that SUVs, particularly models like the CRETA, VENUE, and EXTER, remain key growth drivers, contributing 66.8 per cent to domestic sales. Tarun Garg, Whole-time Director and Chief Operating Officer of Hyundai, mentioned the upcoming launch of the new 6 and 7-seater SUV, Hyundai ALCAZAR, expressing confidence in a strong response during the festive season. However, Hyundai's local sales fell by 8 per cent to 49,525 units last month. Tata Motors, another leading domestic automaker, also saw a decline of 3 per cent, selling 44,142 units in August.

Conversely, some manufacturers like Toyota Kirloskar Motor (TKM), Kia, and MG Motor India reported growth in their sales last month, driven by increased demand for their utility vehicles. Toyota's sales surged by 36.5 per cent to 28,589 units, while Kia experienced a 17.2 per cent rise, selling 22,523 units. MG Motor India sold 4,571 units, with over a third of these sales attributed to electric vehicles.

Sabari Manohar, Vice President of Sales, Service, and Used Car Business at TKM, noted, “As we approach the festive season, demand for our products remains buoyant, and we are already witnessing increased consumer interest and footfall across all our dealerships. SUVs and MPVs continue to significantly contribute to our sales numbers, reflecting a growing preference for these segments, even in tier 2 and tier 3 markets”.

Hardeep Singh Brar, Senior Vice President and National Head of Sales & Marketing at Kia, highlighted the company’s focus on optimizing its product offerings to meet evolving customer needs, stating, “Kia India is committed to offering vehicles that resonate well with our customers' preferences and aspirations while continuously expanding our presence in the country”.

In the two-wheeler segment, TVS Motor Company reported a 13 per cent increase in sales, reaching 289,063 units, attributed to a resurgence in consumer demand across both rural and urban markets. However, the commercial vehicle sector saw subdued sales, with Tata Motors reporting a 16 per cent decline, selling 25,864 units in August.