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Tata Motors is the leading player in the EV market with almost 70 per cent share. Photo: Bloomberg
The flat sales of passenger vehicles (PVs) in the first half of FY25 were a “slight surprise” for the automobile industry, especially as sales in May and June did not meet expectations, Shailesh Chandra, president of the Society of Indian Automobile Manufacturers (Siam), said on Monday.
However, the PV industry expects an increase in sales in the second half due to the festive season and anticipates a growth of “sub-5 per cent” for the entire FY25, he added.
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Siam revealed on Monday that in H1 FY25, domestic wholesales (dispatches to dealers) of PVs recorded a marginal increase of 0.53 per cent year-on-year (Y-o-Y) to 2.081 million units.
“The triangulated view at the beginning of the financial year was 5-8 per cent growth. The expectation for H1 was slightly better. It was a slight surprise, especially May and June, which did not go as per our expectations. May and June affected us badly,” said Chandra, who is also the managing director of PV and electric vehicle (EV) divisions at Tata Motors.
“Sales went up in September but were offset by the Shraddh period. H2 now has a big burden. That is why we expect sub-5 per cent growth in FY25,” he explained.
He mentioned that the high base effect is the main reason behind the flat sales in H1.
“The high base is the main reason. Last year, the industry recorded 4.2 million units annual sales. The demand is strong, which is why domestic sales remain at that level. Generally, at a compounded annual growth rate (CAGR), the growth rate of the industry is similar to the level of GDP. So, it should be 6-8 per cent (just like GDP) in the coming years,” he noted.
When asked about the high level of inventory with automobile dealers, he replied, “Typically, in Q2, inventory levels are higher as a build-up to the festive season. However, we (Siam) do not have an industry-wide inventory number.”
“Q2 of any financial year sees inventory build-up in the industry. Wholesales in Q2 are higher. Q3 is the high retail period and observes lower wholesales. In the first 15 days of this month, we are seeing a 35 per cent month-on-month (M-o-M) growth in retail sales,” he added, expressing optimism about good growth in H2 of FY25.
Electric car sales have been decreasing for the last several months. Tata Motors is the leading player in the EV market with almost 70 per cent share.
Chandra explained the reasons for the downturn. “Whenever there is new technology, the effect of the industry’s growth or downturn magnifies. So, if the industry is seeing a small downturn, it magnifies in the case of new technology,” he stated.
“Fleet sales were a big part of EV sales. It was too high last year. It has gone down this year, which has had an impact. Road tax has been removed in two states, and that has also affected sales,” he said.
However, with more models from more companies coming, this will change, he added. “The trend of growth will return,” he asserted.
He mentioned that there has been no effect on the industry’s supply chain or production due to the geopolitical crisis in West Asia.
The domestic sale of PVs decreased by 1.4 per cent Y-o-Y to 356,752 units in September, according to Siam data released on Monday.
However, domestic two-wheeler sales in the country increased by 15.8 per cent Y-o-Y to 2.025 million units in September, the data showed.
In H1 FY25, domestic two-wheeler sales increased by 16.3 per cent Y-o-Y to 10.16 million units.
First Published: Oct 14 2024 | 1:16 PM IST
