Car sales surge to a record high ahead of impending prices hikes

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Domestic passenger vehicles sales surged 23 percent to a record of 3.793 million units in 2022 as carmakers dispatched more vehicles to showrooms in December before impending prices hikes in the new year.

Discounts by Original Equipment Manufacturers (OEMs) also gave sales a boost in December 2022.

Federation of Automobile Dealers Associations (FADA) President Manish Singhania told Moneycontrol, “Overall, the industry is looking positive in December and we do expect decent growth happening across segments. In the PV space, we expect a single digit YoY (year-on-year) growth during this month.”

Hyundai Motor India reported 20.2 percent growth last month at 38,831 units compared to 32,312 units in the year-ago month.

The company also registered record sales of 552, 511 units in 2022, an increase of 9.4 percent YoY.

Commenting on the 2022 performance, Tarun Garg, director (sales, marketing & service) at Hyundai Motor India Ltd, said, “Despite strong headwinds in the last few years, we have continued to challenge existing boundaries and establish new Industry benchmarks.”

Tata Motors also registered an increase of 13.4 percent in its domestic passenger vehicle sales at 40,043 units last month against 35,299 units in December 2021.

Shailesh Chandra, managing director at Tata Motors Passenger Vehicles Ltd. and Tata Passenger Electric Mobility Ltd, said, “Overall, we expect the PV industry to continue witnessing robust demand in the next quarter. We intend to remain vigilant and closely monitor any possible impact on the supply side due to rising COVID case globally.”

Mahindra & Mahindra Ltd. (M&M) has announced that it has logged 61 percent growth in its passenger vehicle sales at 28,445 units as compared to 17,722 units in the same month last year.

Veejay Nakra, president at Automotive Division, M&M Ltd. said, “Continuing interest from our customers have led to strong demand across our portfolio in December 2022. Due to continuing international disruptions and increasing coronavirus cases, we are keeping a close watch on the dynamic supply chain situation.”

Kia India posted a 95 percent increase in its sales to 15,184 units compared to 7,797 units in the same month last year. MG Motor India also saw its sales going up by 53 percent at 3,899 units during December 2022.

Skoda Auto India reported a 48 percent rise in sales at 4,788 units in December 2022 as compared to 3,234 units in December 2021.

Honda Cars India Ltd reported a 7 per cent increase in sales in the domestic market to 95,022 units in 2022. The company had sold 89,152 units in the domestic market in 2021.

Maruti Suzuki's domestic sales were, however, down by 9.91 percent at 113,535 units last month as against 126,031 units in December 2021.

The company ascribed the decline to the ‘adjusted production’ to ‘reduce dealer inventory’. The company, in a statement, also claimed that a shortage of electronic components had some impact on the production of vehicles, mainly in domestic models and that it was taking measures to minimize the impact.

“December wholesales were muted as manufacturers moderated production to keep year end inventory low at factory and in the dealerships . Also a lot of manufacturers had fewer working days . The production for some waiting models was also affected due to semiconductor parts constraint," Shashank Srivastava, Sr. executive director, marketing & sales at Maruti Suzuki India told Moneycontrol.

Toyota Kirloskar Motor (TKM) posted a 3.8 percent decline in its dispatches to dealers at 10,421 units in December 2022 as against 10,834 units in December 2021.​

The road logistics sector is expected to grow with favourable demand sentiments; the outlook is stable. Operating margins are likely to moderate over FY2022, despite an 11-13% YoY growth forecast in FY2023.

In comparison to FY2022, debt coverage metrics will slightly deteriorate in FY2023. Following healthy growth in FY2022, the accelerated pace of business activities is expected to continue to support the Indian road logistics sector’s growth momentum for FY2023. Compared to the previous estimate of 7-9 percent, ICRA now estimates that the sector will grow by 11-13 percent in FY2023.