Mahindra & Toyota set to achieve record sales in Indian car market amidst industry challenges

Mahindra & Mahindra and Toyota Kirloskar Motor are set to clock record sales for 2024, becoming outliers in a car market where others, including market leader Maruti Suzuki India and second-ranked Hyundai, had a challenging year.

M&M and Toyota are likely to post record sales volume and growth in high double teens as the calendar draws to a close. The sales surge is backed by new launches.

Others in the world’s third-largest automobile market comprising 14 brands including Tata Motors, the third-largest company, are likely to end the year with a slight increase in sales at best or a marginal decline, showed an analysis of the first 11-month sales data issued by the Society of Indian Automobile Manufacturers (Siam) and S&P Global Automotive estimates.

The lacklustre performance by most carmakers is expected to drag overall industry growth rate with estimated sales of 4.2 to 4.5 million units, growing 3-4% over 2023—the slowest pace in three years since the pandemic. This will, however, be the second consecutive year of the Indian car market crossing the 4- million mark.

For the bottom five companies comprising Škoda, Nissan, Renault, Citroen and Jeep, it was yet another year of below-average sales, marked by double-digit declines amid the struggle to win new customers.

Some of these brands like the Jeep and Nissan have remained at the fringes due to a lack of new models. The mass-market European brands, on the other hand, have been a laggard as they haven’t been able to match the price-to-value ratio of the Indian, Japanese and Korean makers.

Riding on the Innova Hycross MPV, which commands nearly a one-year waiting even after two years of launch, the local arm of Japan’s Toyota Motor has displaced Kia as the fifth largest in the pecking order.

Other models in Toyota’s stable including the Innova Crysta MPV, and Hyryder and Fortuner SUVs, are also helping propel sales. The automaker is expected to end 2024 with a record 300,000 units, up 33-35% over last year.

In addition to a continuing strong demand for its own models and Suzuki-rebadged models, an expansion in dealer network, particularly in non-metros also lifted overall volume, according to dealers. As of 19 December, Toyota Kirloskar had a network of 1,113, up from 919 in 2023. Incidentally over half of the company’s sales are from the rebadged Maruti vehicles.

Puneet Gupta, director, S&P Global Mobility, pointed out that in addition to an aspirational brand value Toyota enjoys among personal car buyers, high demand from fleet buyers also boded well for the company. “The Innova draws half its sales from the fleet segment. Not to forget the alliance with Suzuki has drawn first-time Toyota buyers.”

M&M, which is closing in on the second and third largest carmakers Hyundai and Tata Motors, respectively, will also have a record year. For the first time, the maker of Scorpio Nand XUV 700 SUVs is likely to achieve the 500,000 annual sales milestone, ending 2024 with a high double teen growth. Robust volume growth at the Mumbai-based firm will be led by its new SUV models including the Thar Roxx and 3XO, launched in August and April, respectively.

M&M is likely to see sales growth of 22-23%, outperforming an expected 0-1.3% drop at Hyundai, and flat sales to a decline at Tata Motors. After high-paced growth in the first quarter of this year, slowing urban consumption and rising inflation started to weigh on car sales. “The channel inventory continues to be as high as 50-55 days even after the festivals. As a result, carmakers may enter 2025 saddled with stocks,” said Hemal Thakkar, director, Crisil Market Intelligence and Analytics.

Thakkar said the current scenario will impact the industry’s 2025 performance with sales expected to grow in low single digits unless the economy gets a boost from the Union budget, or a rate cut by the central bank.