Maruti Suzuki share price edges higher despite 13.3% drop in domestic PV dispatches in June

Maruti Suzuki share price in focus today: Shares of Maruti Suzuki India, the country’s largest automaker, edged up by nearly 1% in Wednesday's intraday trade to hit the day’s high of ₹12,560 apiece, even as the company’s June dispatches to dealers dropped to their lowest level since December 2023.

The company on Tuesday reported a 13.3% year-on-year (YoY) decline in total domestic passenger vehicle (PV) sales to 1,18,906 units in June, compared to 1,37,160 units in the same month last year as weak demand from urban consumers continued to weigh on overall sales growth, with its largest segment—small cars sales, remaining under pressure.

"The slowdown in passenger vehicle sales is largely due to a sharp decline in the smaller segment cars. Historically, passenger vehicle sales used to grow at 1.5 times the GDP growth. But now, even after 6.5% GDP growth, the car market is nearly flat," MSI Senior Executive Officer Rahul Bharti said.

This is because the once mass small car segment is not participating in the growth at all. This is clearly an affordability issue," Bharti added.

Sales of entry-level cars—typically smaller, simpler, and more fuel-efficient—dropped sharply by 32% in June. The company has been witnessing a sustained decline in demand in this segment, as price tags for these vehicles have risen significantly, largely due to stricter regulations. Overall, sales of smaller cars have fallen by over 70% since 2019.

Meanwhile, dispatches of compact cars—including the Baleno, Celerio, Dzire, Ignis, Swift, and WagonR—as well as utility vehicles such as the Brezza, Ertiga, Grand Vitara, and XL6, also declined by 15% and 7.71%, respectively, in June.

While domestic demand remains muted, the export market has held up well despite rising global economic uncertainty. Maruti Suzuki exported 37,842 units in June, registering a 22% YoY growth.

Meanwhile, the continued weakness in demand for mini car sales has also led the company to scale down production. It manufactured 7,097 mini cars, including the Alto and S-Presso, in June 2024, down from 10,133 units in the same month last year. Overall production in June stood at 1,27,545 units, compared to 1,33,095 units in the year-ago period.

PV sales likely to stay subdued in FY26

Indians bought 4.3 million cars in the last financial year—the highest ever in any fiscal—driven largely by SUVs. However, overall growth remained muted compared to FY24, and it is expected to stay under pressure in the current financial year amid domestic headwinds.

Manufacturers expect car sales to grow by only 1%–2% this year, although some analysts anticipate a recovery starting June or September.

According to market experts, the sustained slowdown in domestic car sales is due to a combination of affordability constraints, fading post-COVID pent-up demand, and the high base effect from previous years—all of which have weighed on overall growth.

Analysts hope that income tax relief and multiple rate cuts by the RBI will support a pickup in consumer sentiment and drive new vehicle purchases.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.