June auto sales: The country’s leading SUV maker Mahindra & Mahindra and the Indian arm of Toyota Motor Corp and Kia Motor clocked comparatively higher car sales in June, which was buoyed by demand for sports utility vehicles (SUV) in that period of the year, which saw an adverse impact of heat waves on purchasing decisions of prospective car buyers.

However, the forecast for an above-normal monsoon has led to considerable growth in tractor sales. Going forward, analysts feel that a robust monsoon can change fortunes of the India's automobile sector, with sales of two-wheelers, three-wheelers, commercial vehicles and moreover personal cars getting a boost.

Hemant Sikka, President – Farm Equipment Sector, Mahindra & Mahindra Ltd said “ The government's announcement of increased foodgrain production, an increase in MSP for major Kharif crops, and further advancement of the Southwest monsoon across the country brings positive sentiments with farmers. With retail momentum having picked up, supported by land preparation and an increase in Kharif crop sowing, demand for tractors is likely to remain strong in the upcoming months. In the export market, we have sold 1431 tractors, a growth of 28 per cent over last year.”

On the first day of every month, automobile firms release wholesale numbers, which are typically vehicle sales made to dealers. The sales numbers are seen as a key indicator of private consumption in India. The automobile sector contributes around 7 per cent to the country's economy.

During the first two months of the ongoing financial year, in April and May, automobile sales were subdued due to an extreme hot weather conditions and an election period.

SUVs lead from front

As per the monthly data from automakers released by the auto companies on Monday, Mahindra and Mahindra’s total car sales grew 11.2 per cent year-on-year, missing out on the brokerage Nomura's 16 per cent estimate and Jefferies' 18 per cent estimate.

The June performance is Mahindra's slowest monthly sales growth since March. An intense dry and hot weather conditions in northern parts of the country has reduced footfall at dealerships, as per Nomura. The brokerage in its outlook added that a normal monsoon this year, could likely lead to a revival in rural sales for passenger vehicles.

Carmakers Toyota and Kia saw a respective growth of 40.1 per cent and 9.8 per cent, which are their highest growth since February.

There has been a sharp increase in domestic sales of the slightly heavier on pocket SUVs, a trend which started last year and has extended into 2024 and seen companies including Mahindra and Toyota, whose portfolios consist almost entirely of utility vehicles.

Exports-driven growth

The country’s largest car maker by numbers, Maruti Suzuki which dominates the more affordable small-car segment, reported a 12.4 per cent climb in June total sales, beating a 2 per cent growth estimate by analysts at Nomura and Jefferies. Its shares rose 2 per cent.

Rahul Bharti, Executive Officer, Corporate Affairs, Maruti Suzuki India Ltd statement on exports. “The fire test of global competitiveness in technology, quality, cost and performance is in exports. Customers in India are also likely to choose models that they know are favorites of customers across many countries of the world. Maruti Suzuki contributes about 42 per cent of all car exports from India.”

Meanwhile, a considerable recovery in domestic demand from rural areas outweighed weak exports, helping Pune-headquartered motorcycle-maker Bajaj Auto, clock a 5.1 per cent growth in two-wheeler sales. While this beat Nomura's estimate of a 1 per cent decline, it missed Jefferies' estimate of 10 per cent growth.

The sales of two-wheeler in rural segments have recovered from weakness through fiscal 2024, which had hurt entry-level sales for motorbikes such as the Bajaj Platina. The rural sector accounts for more than half of India's total two-wheeler sales, according to a 2023 report by motorcycle maker Hero Motorcorp, opens new tab.

(With Reuters inputs)

June auto sales: Can India's auto sector see robust sales post monsoon?

There was an adverse impact of heat waves on purchasing decisions of prospective car buyers.

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