April Auto Sales: Maruti Suzuki flags decline in bookings in April, electric two-wheelers lose momentum due to FAME-II irregularities
- India’s largest car maker Maruti Suzuki sounded a note of caution for the automobile sector stating that it had witnessed a decline in bookings in April.
- The company’s senior executive director for marketing and sales, Shashank Srivastava said there are ‘mixed signals’ as far as the demand outlook is concerned.
- He also underlined that SUVs are in the driver’s seat as far as growth in the passenger vehicle segment is concerned. SUVs accounted for nearly half of the total car sales in April.
AdvertisementIndia’s largest car maker Maruti Suzuki sounded a note of caution for the automobile sector stating that it had witnessed a decline in bookings in April due to elevated inflation and weakening consumer sentiments in rural areas due to El Niño.
Maruti Suzuki’s senior executive director for marketing and sales, Shashank Srivastava said there are red flags for growth in the future. With elevated inflation leaving less money in the pockets of consumers, price hikes by auto companies making vehicles relatively less attractive and El Niño threatening to impact rural India, Srivastava remained cautious on the future outlook for the company.
“There are mixed signals as far as demand is concerned. Our enquiry levels have gone up, but bookings are lower. We have to wait and watch how the market evolves going ahead,” Srivastava said.
A less-than-normal monsoon could have an impact on rural demand, he added.
Despite this, Maruti Suzuki remained comfortably perched atop the Indian passenger vehicle market – its April dispatches to dealers grew 13% YoY to 1.37 lakh units, higher than the cumulative dispatches of the next three companies, namely Hyundai, Tata Motors and M&M.
Source: Company reports
Earlier in a post-earnings call, Maruti Suzuki chairman RC Bharghava said that growth in the small cars segment is likely to remain flat in FY24 due to shifts in consumer buying preferences and affordability.
Now, Srivastava has shed further light on this, stating that the discontinuation of Alto 800 due to BS6 Phase 2 norms has led to a drop in sales of its small cars in April.
With increasing input costs, inflation and new safety norms driving up the prices of cars, Bharghava quipped that Indians will need to get richer for small cars to grow further.
SUVs in the driver’s seat
Sports utility vehicles (SUV) are firmly in the driver’s seat as far as the Indian passenger vehicle market is concerned. The share of SUVs in the overall passenger vehicle sales in April increased to 47.4%, from an average of 44% in FY23.
“There is a consistent increase in both entry-level, as well as mid-SUV segments. Although the Maruti Suzuki Grand Vitara supplies were constrained last year, they could have improved the SUV penetration in the market even further,” Srivastava said.
Maruti Suzuki plans to launch multiple SUVs in FY24 as it looks to expand its portfolio to counter the challenge by rivals like Tata Motors and M&M.
Analysts say that a richer product mix due to the focus on higher-priced SUVs, in addition to other factors, will aid Maruti Suzuki’s margins. Yes Securities expects the company’s earnings before interest, taxes, depreciation and amortisation (EBITDA) margins to expand to 11.2% in FY24 from 9.4% in FY23.
The company’s order book stood at 3.73 lakh units, and its latest SUV, Fronx, has already received 26,500 bookings. It will compete with the Kia Sonet, which was Kia’s top-selling car in April with 9,744 units sold during the month.
Electric two-wheelers plummet in April due to FAME-II irregularities
Electric two-wheeler sales shrunk dramatically in April, with registrations falling by 24% due to FAME-II irregularities flagged by the government.
The ongoing investigation by the ministry of heavy industries has led to a liquidity crisis and a slowdown in production and thereby sales – the share of electric two-wheelers in overall two-wheeler sales fell to 5.4% in April from 5.9% in March.
All in all, 62,581 electric two-wheelers were sold in April according to data from VAHAN. Ola Electric topped the charts with nearly 21,560 units sold during the month, up from 21,389 units in March.
Ola Electric was also the only exception in the electric two-wheeler segment, which saw all its rivals registering a decline.
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