The Indian auto sector witnessed another month of strong sales growth in January 2024, reflecting buoyant underlying demand and a positive growth momentum. Total sales across passenger vehicles (PVs), commercial vehicles (CVs), two-wheelers (2Ws) and three-wheelers (3Ws) grew by 15-25% year-on-year.
Passenger Vehicle Sales Stay Resilient
PV sales grew 15-17% in January, a robust growth especially considering the high base of last year.
Market leader Maruti Suzuki continued its growth trajectory with a 16% rise in volumes while Mahindra & Mahindra (M&M) grew faster at 30%.
SUVs continued to outperform other segments. For example, they grew 75% for Maruti, and 30% for M&M.
Maruti's new launches like Fronx and Grand Vitara have been receiving strong customer response.
At the same time, demand for small cars remains subdued, as reflected in the 8% decline in Maruti’s passenger car volumes.
CVs Face Mixed Trend; M&M Bucks Slowdown
The CV segment -- comprising trucks, pickups, three-wheelers and people carriers -- had a mixed showing, with some reporting growth while others saw a decline in January.
Market leader Ashok Leyland was among those that saw a decline, with a 7% fall in volumes, while Mahindra & Mahindra's CV sales grew 8% YoY.
Demand for CVs is expected to pick up in coming months due to rising infrastructure activity, improved industrial production and higher shipment volumes.
However, some supply-related issues seem to have impacted volumes for players like Ashok Leyland. The recently announced measures in the Union Budget 2024 regarding infrastructure expansion and overall government spending also bodes well for long-term CV demand.
2W Segment Outperforms on Broad-based Growth
The 2W segment put up yet another stellar show, significantly outgrowing other automobile segments. This is in contrast to its performance through 2023, when it underperformed other segments.
Market leader Hero MotoCorp volumes expanded 22%, Bajaj Auto grew 28% - driven by a 33% rise in domestic sales, and TVS Motors clocked 25% sales growth in domestic two-wheeler sales.
The strong rural recovery, wedding season demand uptick and growth in exports seem to be aiding the two-wheeler sector performance.
With most manufacturers registering 20%+ growth, two-wheelers continue to drive the overall auto sector volumes based on its dominant share.
Tractor Volumes Remain Subdued
The tractor segment continued to report subdued numbers for January, declining 17% for M&M and 7% for Escorts Kubota on a YoY basis.
Delayed rabi sowing season and unfavourable weather impacted sales momentum. However, with forecast of a healthy rabi output, tractor volumes could recover in coming months. Government’s continued policy support for agriculture also augurs well for long term tractor demand.