The month of December is generally a slow month in terms of auto sales but this time the actual sales up until December 24 are starker than expectations. While the month on month numbers might not be the right metric considering Diwali being the first week and an auspicious time to purchase vehicles, the year on year performance doesn’t offer respite either. We look at the key numbers for car makers like Tata Motors, how M&M continues to outperform the industry and why rebadged Toyotas are hurting Maruti Suzuki.
Sales Slump in December
Tata Motors is having a torrid time in the market with increased competition from other electric car makers while slowdown in SUV sales have hurt the company. For first 8 months the company’s sales have fallen 2% compared to last year and December doesn’t seem to offer respite. Retail sales have fallen 41% in December despite discounts offered by the carmaker. The company recently launched the Curvv EV and diesel variant and is banking on launches such as Harrier EV and Sierra for growth. Competition from players like MG Motors has also split the EV market.
Maruti has been the other car maker showing a 27% fall in sales in December, while interestingly Toyota has seen just a 3% fall in sales. The reason we mentioned both these companies in the same breath is also because of their partnership of sharing models. Currently Toyota manufacturers and sells rebadged models of Maruti. The Baleno is rebadged as Glanza while Maruti’s Grand Vitara becomes Hyryder for Toyota. Maruti also shares the Ertiga and Fronx with Toyota.
Currently roughly 36% of sales for Toyota are through rebadge Maruti models and that is also impacting some sales for the latter.
Hyundai India is also affected by this slump as the growth in SUVs has slowed down. Currently 68% of sales for the company is coming from SUVs led by Creta. With slowdown in SUVs the company has tried to launch updates of key models like Alcazar. The Creta EV will be the next pivot for the company and key monitorable as well.
Going Forward
M&M continues to be the front runner in growth this year. The company has reported a solid 20% growth in sales between April and November this year. While the company has reported 15% fall in sales compared to same time last year, it has been steadfast with new model launches and growing faster than the market.
Brokerages also see most upside on M&M with 88% analysts covering the stock having 'buy' calls while they remain most bearish on Tata Motors. Maruti has also attracted 70% 'buy' calls from analysts with BNP Paribas seeing almost 50% upside with a target price of Rs. 16,600.
The expectation of growth in quarter 4 is immense to show some growth in FY25. But with more car launches from most carmakers starting 2025, expectations remain for a better year in 2026.
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