Auto sales: Maruti Suzuki, Hyundai cruise; analysts eye monsoon for booster shot

After making a strong head-start in April with 11% growth, passenger vehicle sales growth in May appears to have slowed down to around 6%, according to industry estimates for wholesale sales.

While market leaders Maruti Suzuki and Hyundai continued to post double-digit growth in domestic sales, utility vehicle leader M&M saw its sales growth slowing down to 8%. M&M has recorded strong growth in domestic sales since October last year with back to back launches of new models. For the top-five players in the domestic market, the growth in domestic sales has seen a growth of 10% in May.

For the coming months, analysts have expressed optimism over the implementation of the 7th pay commission recommendations along with the expected announcements on incentives for discarding vehicles older than 10 years. Moreover, new launches which are expected to gather momentum from the second quarter of the financial year will also drive sales.

“Except uncertainty around diesel vehicles, all other growth indicators look positive and will support the growth this fiscal year. New launches will drive the growth in the passenger car segment. Sudden shift from diesel vehicle to petrol vehicle will put a lot of pressure on supply chain ecosystem,” Abdul Majeed, partner at Price WaterHouse said.

Maruti’s growth has mainly stemmed from high demand for the premium hatchback Baleno and compact SUV Brezza. While the compact segment which includes Baleno saw a growth of 11% in May, the utility vehicle sales grew 144% year-on-year.

However, in the entry level mini-segment, Maruti’s volumes continued to witness a decline. This segment accounts for one-third of Maruti’s volume and includes popular models Alto and WagonR. The entry-level segment has in the past few months seen French car-maker Renault register strong volume with the high-demand for its hatchback Kwid. For Maruti, the mini segment has seen a fall in sales in each month since January.

On the two-wheeler front, sales for market leader Hero MotoCorp slowed down to 2.32% after double-digit growth for three consecutive months. At the same time, Honda Motorcycle and Scooter saw growth continuing at 17% rate, even though slower than the 26% growth in April. Honda’s sales saw the uptick with higher demand for its motorcycles which grew 25% while scooter sales grew 7%.

Among other players, Royal Enfield continued strong growth of 36%, which comes mainly on a lower base and comparatively smaller volumes. Analysts are expecting the sales to pick up further if the monsoon remains at the forecast levels as close to 50% of motorcycle sales in the country come from rural areas.

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