The Update on how have auto mobile sector performrd in December.
Table of Contents
PVs end 2024 in top gear; CVs demand recovery in sight
The Indian automobile industry recorded impressive growth in wholesale numbers for the third straight month, closing the year with 15.6 million units sold. Growth was strong across all segments, with passenger vehicles (PVs) leading the way. Factors like attractive year-end discounts, exciting new launches, and post-festive season restocking at dealerships fueled demand. The industry reported a 4% year-on-year (YoY) growth rate, though the month-on-month (MoM) comparison was influenced by festive season fluctuations.
PVs saw an 18% YoY growth in domestic sales and an outstanding 38% annual growth in exports, with year-end discounts playing a key role in driving demand. The commercial vehicle (CV) segment showed signs of recovery, achieving a 3.1% YoY growth and a sequential rise of 10%, reflecting improving domestic demand. The recovery could further benefit from pre-purchases by customers ahead of a planned price hike in January 2025.
A recent Goods and Services Tax (GST) hike on pre-owned small cars and electric vehicles (EVs) is expected to have minimal overall impact. Dealers believe the price hike may create short-term challenges for small cars but will not significantly affect long-term demand. The secondary EV market remains underdeveloped, so the used EV segment will likely remain unaffected. For 2025, the outlook for the automobile industry is cautiously optimistic, with expected growth ranging from single to mid-teen digits across most segments. However, challenges persist in the PV small car segment, where demand revival will depend on new launches and recovering rural demand.
Passenger Vehicles
In December 2024, the Indian passenger vehicle (PV) segment showed impressive high-teen growth, driven by attractive year-end discounts and early purchases ahead of the price hike planned for January 2025. Maruti Suzuki India Limited (MSIL) posted strong 24% domestic growth year-on-year, while maintaining solid export numbers. A key highlight was the revival in the mini and compact sub-segment, which had struggled in recent months. Continued recovery in this sub-segment, supported by improving rural demand, is expected to ease recent pressures on the company. Utility vehicles (UVs) remained a significant driver of growth.
Tata Motors saw a modest 2% growth for the month, supported by strong traction in the electric vehicle (EV) segment, which led to an 11% annual increase. The company sold a total of 44,200 units in December but continued to face challenges in international markets, consistent with previous trends. The Tata Punch became India’s best-selling car model for the year.
Mahindra & Mahindra (M&M) delivered exceptional performance with an 18% year-on-year growth, selling 41,400 units and exceeding market expectations. The company remains a leader in the UV segment and also achieved the top rank in the Dow Jones Sustainability Index for global auto manufacturers. Looking ahead, M&M is set for further growth with its new battery electric vehicle (BEV) launches, solidifying its leadership as it expands its powertrain offerings.
Two Wheelers
In December 2024, the two-wheeler (2W) segment showed mixed results. Industry leaders like Bajaj and Hero MotoCorp Limited (HMCL) reported declining sales, while TVS and Eicher achieved healthy growth. Domestic sales faced pressure, with a 9% decline in the market, likely due to fewer discounts after festive season stock clearance. However, a rise in exports helped offset further losses.
Bajaj Auto’s domestic sales fell 19%, missing market expectations, but exports grew by 15%. The company launched the Chetak 35 series, priced between ₹1.2 lakh and ₹1.27 lakh, and plans to expand its EV portfolio by exporting Chetak scooters within six months. The reduced cost of the new Chetak series is expected to improve profitability. HMCL’s volumes dropped 22% year-on-year to 2.9 lakh units due to weak rural demand and fewer discounts. It introduced the Xpulse 200 4V Dakar Edition motorcycle and the new VIDA V2 range of electric scooters in three variants, supporting its strategy to grow the VIDA brand at multiple price points in the electric scooter segment.
TVS recorded 7% domestic growth and 22% export growth, while Royal Enfield (RE) saw a 25% year-on-year rise domestically and a remarkable 91% increase in exports. However, Vahan data indicated muted retail demand for RE during the month. In the electric two-wheeler (e2W) market, Bajaj overtook Ola to become the market leader, with the following market share rankings: 1) Bajaj Auto (25%), 2) TVS Motors (23%), and 3) Ola Electric (19%).
Commercial Vehicles
To address rising inflation, major commercial vehicle (CV) manufacturers announced a price hike of up to 3% across their product range. With demand softening, this move seems necessary to protect profit margins. Dealers reported increased retail activity as some customers rushed to make purchases before the price increase. Rural dealers expect a sales boost in Q4FY25, fueled by anticipated announcements in the upcoming Union Budget. Additionally, CV manufacturers are seeing strong order inflows in the bus segment.
Ashok Leyland recently secured an order worth ₹345.6 crores to supply 1,475 BSVI diesel bus chassis to Tamil Nadu State Transport Corporation, with deliveries planned from December 2024 to May 2025. Similarly, Tata Motors received an order for 1,297 bus chassis from Uttar Pradesh State Road Transport Corporation (UPSRTC), supporting its volumes.
Among individual players, M&M achieved an 8.9% growth, driven by LCVs (2T-3.5T). Ashok Leyland grew by 4%, reaching 15.7k units, with M&HCV trucks leading the growth and helping the company surpass market expectations. VECV’s volumes rose 2% YoY to 7.8k units, thanks to strong bus demand, which remains a key driver. Tata Motors’ CV segment, however, remained flat, posting a 1% decline in volumes.
Tractors
In December 2024, tractor sales showed mixed results in both domestic and export markets. The domestic segment remained mostly stable, with M&M recording strong growth of 22%, while Escorts saw a decline of 12.5%. On the export side, the segment experienced a 9% decline, mainly due to weaker performance by M&M, though Escorts posted solid numbers internationally. Looking ahead, we expect demand to pick up, supported by kharif crop procurement, strong rabi sowing, and improved water levels in reservoirs.
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