Auto sales remain mixed in August: Passenger Vehicles, CV volumes drop, Electric two-wheelers see strong growth

Automobile companies reported weak wholesale figures for August, driven by slower volumes in the Passenger Vehicle (PV) and Commercial Vehicle (CV) segments. While domestic two-wheeler sales marginally surpassed market expectations, both PV and CV sales declined on a year-on-year (YoY) basis.

The decline in domestic PV and CV sales volumes was primarily due to weak demand trends and lower sales conversions, influenced by the monsoon season. In contrast, tractor volumes remained stable on a YoY basis. Export demand for two-wheelers also remained flat in August 2024. However, the electric two-wheeler segment experienced strong growth, fueled by new launches from established players, according to a report by Kotak Institutional Equities.

Domestic PV sales drop

Domestic PV sales witnessed a low single-digit YoY decline in August, driven by weak retail demand and elevated inventory levels of approximately 70 days at dealerships, according to estimates by Kotak Equities. Retail PV sales also recorded a mid-single-digit YoY decline during the month.

Maruti Suzuki India, the country's largest passenger car manufacturer, saw a 4% YoY decrease in total volumes in August, primarily due to a 5% YoY drop in domestic sales, partially offset by a 6% YoY growth in export volumes. Consequently, Maruti Suzuki's wholesale market share declined to approximately 40.5% - 41%. Tata Motors reported a 3% YoY decline in PV volumes, while Mahindra & Mahindra (M&M) saw a 16% YoY increase in PV volumes last month.

High single-digit YoY growth in domestic two-wheelers sales

Two wheeler wholesales in the domestic market recorded high single digit growth on a YoY basis last month on account of channel filling ahead of festival season for most Original Equipment Manufacturers (OEMs). Retail sales of internal combustion engine (ICE) two-wheelers also showed mid-single-digit YoY growth.

The electric two-wheeler segment saw a significant 41% YoY surge in retail sales, fueled by mass-market EV launches from incumbents and aggressive discounting by certain players. However, export volumes of two-wheelers remained flat on a sequential basis.

Among two-wheeler manufacturers, Hero MotoCorp reported a 5% YoY increase in volumes, while TVS Motor Company posted a robust 14% YoY growth, supported by 13-19% YoY growth in both domestic and export segments. In contrast, Royal Enfield's volumes declined by 5% YoY, whereas Bajaj Auto's volumes rose by 18%, primarily driven by strong performance in the domestic two-wheeler segment.

Decline in CV segment volumes

The domestic CV segment experienced a low double-digit YoY decline in volumes, impacted by weakness in the Medium and Heavy Commercial Vehicle (MHCV) truck and Light Commercial Vehicle (LCV) segments. Tata Motors’ domestic CV sales fell by 15% YoY, with a 23% decline in Small Commercial Vehicle (SCV) cargo and a 15% drop in MHCV truck sales. Ashok Leyland reported a 7% YoY decrease in volumes, while VECV's volumes saw a modest 1% YoY increase in August 2024.

Tractor sales remain flat

According to estimates by Kotak Equities, domestic tractor industry volumes remained flat in August, falling 5-6% below projections on a year-on-year (YoY) basis. This performance was attributed to uneven rainfall distribution, with deficit precipitation particularly impacting the northern and eastern regions. However, the brokerage firm anticipates a recovery in tractor sales during the second half of FY25.

M&M tractor volumes grew by 1% YoY whereas Escort Kubota’s tractor volumes remained flat YoY in August 2024.

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