Carmakers upbeat as domestic sales poised to reach 4.2 million units in FY24

On a cumulative basis, the PV industry dispatched 3.86 million units of cars, utility vehicles and sedans to dealership outlets between April 2023 and February 2024

Car sales in India are expected to touch a record 4.2 million in FY24, with an estimated 375,000 passenger vehicles likely to be sold in March, the last month of the ongoing financial year, according to experts. That would be an 8 percent increase from 3.89 million cars sold in FY23.

Automotive companies dispatched 3.86 million cars, utility vehicles and sedans to dealership outlets as of February, an 8.6 percent jump from 3.55 million units in the same period a year earlier, as per industry data.

Car sales at Maruti Suzuki, Hyundai Motor India, Tata Motors, and Mahindra & Mahindra are increasing thanks to improved semiconductor supplies, robust demand for sports utility vehicles, healthy economic growth in the past few quarters, a favourable monsoon, and effective monetary policies.

Strong growth

Many carmakers have revised the segment's growth projections upwards from low single digits to 8+ percent for this financial year.

“The projections for PV sales at the beginning of the year had three uncertainties built in: supply-side constraints due to the semiconductor crisis, negative effect of El Niño on the monsoon, and the stickiness of inflation resulting in higher bank rates and the consequential increase in auto loan rates,” said Shashank Srivastava, senior executive officer (marketing and sales) at Maruti Suzuki, India's largest car company by market share.

He maintained that Maruti Suzuki’s forecast for the domestic PV market was 6-7.5 percent growth because of “strong economic growth.”

“While the economy grew faster than the projected 6-6.5 percent, the negative factors did not fully play out, with auto loan rates creeping up only slowly, monsoons being only marginally lower than the long-term average and supply constraints withering away,” Srivastava noted.

A senior Hyundai Motor official said the company anticipates the Indian auto industry will close FY24 with a more than 8 percent growth over last year.

“The comprehensive revamping of our model lineup and the successful launches of Creta and Creta N Line have propelled us to achieve growth of 8.7 percent compared to the previous fiscal year till February 2024. The exceptional reception to our SUVs further bolsters our confidence in concluding the fiscal year 2023-2024 on a high note,” said Tarun Garg, chief operating officer of Hyundai Motor India.

For Tata Motors, October-December was a strong quarter with robust festive sales.

“We will remain agile and are optimistic about continuing the growth trend in the quarters ahead,” said Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility.

However, PV sales growth may moderate to 3-6 percent during the next financial year, according to analysts.

“Lower growth expectation for next year partly stems from waning pent-up replacement demand, which supported the industry over the past couple of years,” said Srikumar Krishnamurthy, senior vice president & co-group head - corporate ratings, ICRA Limited. "Healthy operating leverage, coupled with softening in commodity prices, is expected to aid in margin expansion going forward. The credit profile of PV OEMs will remain healthy, supported by low leverage, strong liquidity and/or strong parentage.”