Passenger vehicle sales fall for first time in over two years in July

Sales of passenger vehicles fell for the first time in more than two years in July on a high base worsened by sluggish demand and inventory glut at dealerships.

Two-wheelers however grew in double digits, and three wheelers in low single digits, helped by steady recovery in rural demand, on a low base.

Passenger vehicles crossed the pre-pandemic sales peak of 3.38 million units in FY19 in the last financial year, driven by pent-up demand. While car sales have slowed since, two-wheelers and three-wheelers which are yet to breach pre-Covid records are steadily recovering due to a turnaround in rural demand.

A total of 341,510 cars, utility vehicles and vans were sold last month, a 2.5% decline from 350,355 units a year earlier, according to data from industry body Society of Indian Automobile Manufacturers (SIAM). Passenger vehicle sales last fell in February 2022. At the time, sales declined by 1.8% to 302,965 vehicles. SIAM publishes wholesales or vehicle despatches by automakers from factories to dealerships and not retail sales.

While sales of small cars, sedans and hatchbacks declined last month, utility vehicles, which includes both sport-utility vehicles (SUVs) and multipurpose vehicles (MPVs) like Ertiga and Innova, grew in modest single digits in July.

Dealer stocks currently range between 405,000 and 410,000 vehicles, as per industry estimates.

In July, leading carmakers Maruti Suzuki, Hyundai Motor India and Tata Motors posted decline in sales. While sales at Maruti fell 9.6% from a year earlier to 137,463 units, rival Hyundai reported a 3.3% drop at 49,013 units. Sales at Tata Motors fell 6% to 44,725 units.

Toyota Kirloskar Motor (TKM) and Mahindra & Mahindra (M&M) bucked the trend to register 44% (29,533 units) and 15% (41,623 units) growth respectively. The companies saw sales rise on the back of demand for utility vehicles like Toyota Innova Hycross and Mahindra XUV700. JSW MG Motor India too grew sales by 35% to 4,572 units on a low base.

“Though three-wheeler and two-wheeler segments are performing well, there has been some degrowth of passenger vehicles and commercial vehicles in July 2024, compared to July 2023,” Vinod Aggarwal, president, SIAM said, adding “above average rainfall coupled with upcoming festive season is likely to again propel growth in the short term.”

Sales of motorcycles, scooters and mopeds in the month under review went up by 12.5% to 1,441,694 units. Those of three-wheelers rose 5.1% to 59,073 units.

“Three-wheelers posted a growth of 5.1% compared to July last year, with sales of 59,000 units in July, which is close to the peak of 2018-19. Two-wheeler segment also posted a decent growth of 12.5% in July 2024 as compared to July 2023, with sales of 1.442 million units,” said Rajesh Menon, director general, SIAM.

According to Aggarwal, enabling announcements in the Union budget focusing on overall economic growth with fiscal support for infrastructure and rural sector should augur well for the auto sector in the medium term.