Chart Beat: Passenger vehicle sales to rise in February

According to auto industry body SIAM, while this financial year is likely to record 4.18-4.20 million units in passenger vehicle sales, the high base set in FY24 points to a more benign growth outlook of close to 4.3 million units in sales in FY25.
(File Photo: Bloomberg)
According to auto industry body SIAM, while this financial year is likely to record 4.18-4.20 million units in passenger vehicle sales, the high base set in FY24 points to a more benign growth outlook of close to 4.3 million units in sales in FY25. (File Photo: Bloomberg)

Summary

  • While companies such as M&M look poised for growth due to strong utility vehicle portfolio, Maruti Suzuki faces challenges in the entry-level segment amid competitive pressures

Passenger vehicle (PV) registrations in February grew year-on-year but dropped sequentially, according to Vahan data. Nomura Financial Advisory and Securities (India) estimates that retail sales hit approximately 330,000 units in February, marking an 8% year-on-year increase. Notably, vehicle discounts saw a rise month-on-month following a seasonal dip in January, according to the report by Nomura. Consequently, wholesale volumes for PVs are expected to exhibit a similar pattern of annual growth coupled with a sequential decline.

Here, companies with portfolios skewed towards utility vehicles such as Mahindra & Mahindra Ltd (M&M) have an upper hand given the increasing preference for premium vehicles. With an impressive order backlog of around 226,000 units as of 1 February and its efforts to ramp-up capacity, M&M is likely to grow ahead of the industry average in the coming months. Tata Motors Ltd, boasting a healthy utility vehicle portfolio, is also set to benefit from robust demand.

Conversely, the entry-level vehicle segment continues to struggle with persistent weak demand, adversely affecting volumes of Maruti Suzuki India Ltd. Moreover, “Maruti’s growth could be slower in FY25 as the new model cycle is not as strong as last year and there will be more new launches by competition," pointed out the Nomura report.

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