Indian automakers beat Covid woes as sales in May surpass 2019 levels

However, executives warn of rising inflation's impact on demand

India’s automakers appear to have put the challenges of Covid-19 behind them as sales surpassed 2019 levels in May. However, company executives have warned that supply chain constraints, worsened by a high inflationary environment and rising interest rates, could hit demand.

The country’s largest carmaker Maruti Suzuki India (MSI) on Wednesday said its total wholesales in May stood at 161,413 units. This was 20 percent higher than what the company sold in the corresponding period in 2019, which can be taken as a benchmark year for pre-Covid sales.

“If we take the FY20 [financial year 2019-20] sales into context, the industry would have almost caught up if semiconductor availability would not have hurt production,” said Shashank Srivastava, executive director of sales at Maruti Suzuki. However, he said the auto industry was yet to reach levels seen in FY19, which was one of the best years for the industry.

Sales of Maruti’s mini cars, comprising Alto and S-Presso, stood at 17,408 units last month, compared with 4,760 in the same month last year. The company said sales in the compact segment – including models like Swift, Celerio, Ignis, Baleno, and Dzire – was 67,947 units in May.

Similarly, Hyundai’s sales rose to 51,263 units, a 20.6 per cent increase over the 2019 figure. The numbers would have been higher but for the fact that both the company’s plants in Chennai underwent scheduled biannual maintenance. This meant no production for six days from May 16 to 21.
 

Mumbai-based Tata Motors’ sales volume in the domestic and international market stood at 76,210 units in May, which was around eight per cent higher than the 40,155 units sold in 2019.

The firm regained the second spot in the industry, beating Hyundai. The company is watching carefully for the impact of rising interest rates  on demand, Tata Motors’ Chief Financial Officer PB Balaji said recently.

Banks and non-banking financial companies, which finance nearly 80 per cent of retail automotive sales, have been raising interest rates following the lead of the Reserve Bank of India.  

RBI Governor Shaktikanta Das recently said the central bank will raise interest rates in June when the Monetary Policy Committee holds its next meeting, following the surprise 40-basis-points increase in the repo rate in May.

Two-wheelers

Meanwhile, two-wheeler sales remained sluggish with Bajaj Auto reporting total sales of around 275,000 units in May, which was 11.23 per cent lower than what it produced in April. TVS Motor Company reported total sales of 302,982 units in May.

While two-wheeler sales had finally grown in April after a long slowdown, analysts said the growth could not be sustained as companies were forced to hike prices because of the increase in raw material prices.