Heatwave, elections hindered May car sales in India despite discounts
The Indian auto retail sector experienced a 2.61% year-on-year (YoY) growth in sales during May, according to data from the Federation of Automobile Dealers Associations of India (FADA). The growth was primarily driven by improvement in sales of two-wheelers, three-wheelers, and commercial vehicles. However, passenger vehicles and tractors saw a decline in sales. The overall vehicle sales for May stood at 20,89,603 units, marking a 5.28% decrease from April's figures. Extreme heat and elections impacted MoM sales, per FADA.
May saw 18% drop in showroom visits
FADA's monthly report highlighted that extreme heat and ongoing elections resulted in an 18% drop in showroom visits. A rapid attribution study by ClimaMeter, an independent group of climate scientists, revealed that the heatwaves experienced in May were nearly 1.5 degrees Celsius warmer than any previously recorded in India. The report also warned that above-normal rainfall forecasts could further impact sales and showroom visits in the coming months.
Positive rural demand and improved finance availability
Despite these challenges, FADA noted that positive rural demand due to expected good monsoon and improved finance availability helped maintain sales. The movement in market loads, cement, iron ore, and coal sectors also had a positive impact. However, dealers identified elections and related uncertainties, as well as financial constraints due to market liquidity issues and high inventory levels, as factors affecting customer sentiment and leading to delayed purchasing decisions.
Two-wheeler and passenger vehicle segments hit hardest
The two-wheeler segment was hit particularly hard by supply constraints, lack of original equipment manufacturer (OEM) marketing activities, and the impact of extreme weather and elections. Despite better supply and discounts, the lack of new models, intense competition, and poor marketing initiatives by OEMs also affected sales. In the commercial vehicles segment, dealers reported that elections and extreme weather conditions heavily impacted sales.
Changing market share in two-wheeler segment
Market dynamics in the two-wheeler segment saw significant changes in May. Hero MotoCorp continued to dominate the market but its share dropped by 6% compared to last year. Honda Motorcycle and Scooter India and TVS Motor Company saw an increase in their market shares. Among electric two-wheelers, Ola Electric is gradually gaining market share while shares of Ather Energy has declined significantly as sales more than halved in May compared to last year.
Maruti Suzuki mainted the top spot in commercial vechicle segment
In the automotive sector, Maruti Suzuki maintained its position as the market leader with a share of 39.97%, albeit slightly lower than April's 40.86%. Hyundai Motor and Tata Motors held onto second and third places, respectively, followed by Mahindra and Kia Motors.
