Car sales remain robust, highest ever May dispatches expected at 3.3-3.35 lakh units

Sustained demand for SUVs, marriage season and rural buying is set to drive the volumes higher by 12-15%.

Ketan Thakkar By Ketan Thakkar calendar 31 May 2023 Views icon12318 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Car sales remain robust, highest ever May dispatches expected at 3.3-3.35 lakh units

Despite fears of a market slow down, the Indian passenger vehicle market is set to post its best ever May sales on a sustained buying momentum for SUVs, the marriage season and improved uptick in the rural buying due to healthy rabi sowing and higher proceeds for farmers.

According to industry players, the market is set to cross 3.3 lakh units in dispatches, which is 12-13% higher than the 2.93 lakh units dispatched for May 2022. If not for the shortage of parts at Maruti Suzuki and Mahindra & Mahindra, who are both sitting on a very healthy orderbook, the numbers could have been higher.  

Shashank Srivastava, Senior Executive Officer, Marketing and Sales at Maruti Suzuki told Autocar Professional that the flow of bookings have been good in the month of May.

“Due to continued stability in demand, the dispatches of May month may be at an all-time high. The industry is however cautiously watching the effect of interest rates, monsoon patterns amid supply constraints of semiconductors that has impacted the availability of some models in the industry. For Maruti, new models like Grand Vitara, Jimny and Fronx, the booking momentum has remained healthy,” added Srivastava, at the sidelines of a Jimny event earlier in the month.

What makes this growth impressive is that it is happening in the face of increased vehicle prices, 250 basis points rise in the interest rates, high inflation and moderation of GDP growth. The booking momentum across industry has remained healthy with a cumulative orderbook remaining around 7.5 lakh units.

The retails are estimated to have lagged behind with an erratic supply of semiconductor chips. The retail sales for May is seen at 3.1 lakh units which is 20,000 lower than dispatches, and hence the stock at dealerships has increased slightly to around 2.7 lakh units which is about 24-25 days of monthly stock.  

Maruti Suzuki had open bookings of 3.75 lakh units and Mahindra & Mahindra last week said, despite the growth in dispatches at their end, the booking momentum has remained higher than the production and the company has witnessed its orderbook increase to 2.92 lakh units at the end of FY23 versus 2.62 lakh units it had at the end of Q3 of FY23.

In its preview report on May despatches, Anand Rathi has forecasted the passenger vehicle market to grow by 15% in May on account of improved supplies and new launches.

The likes of Maruti Suzuki, Mahindra & Mahindra, Toyota Kirloskar are currently in the middle of ramping up capacity to cater to this higher demand.

The automotive industry body - Society of Indian Automobile Manufacturers has forecasted the passenger vehicle market to grow by 5-8% in the current financial year. However, the cumulative April and May sales in FY24 has grown in double digits at around 12-13% laying ground for a good sustenance this fiscal year too.

Rajesh Jejurikar, ED, Automotive & Farm Business at Mahindra & Mahindra says, there is weakness in demand in the sub-Rs 10 lakh range however the SUV segment is still expected to grow by over 10% in the current financial year.

Almost all vehicles sold by the company are in the segment above Rs 10 lakh and that too in the SUV space, hence the company expects the outperformance to continue.    

 

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