Indian Carmakers Report SUV-Led Sales Growth in June Despite Heat Waves

Carmakers Mahindra & Mahindra and the Indian units of Toyota Motor Corp and Kia Motor reported higher car sales in June, boosted by demand for sports utility vehicles (SUV) even as heat waves weighed on purchase decisions. Each month, automobile makers in India release wholesale numbers, or vehicle sales, to dealers. The sales numbers are seen as a key indicator of private consumption in India.

The auto sector contributes around 7% to the country's economy. According to monthly data from automakers released on Monday, Mahindra's total car sales grew 11.2%, missing brokerage Nomura's 16% estimate and Jefferies' 18% estimate. This is Mahindra's slowest monthly sales growth since March.

Intense heat in northern India has reduced footfall at dealerships, according to Nomura, which added that a normal monsoon could likely lead to a revival in rural sales for passenger vehicles.

Toyota's and Kia's respective growths of 40.1% and 9.8% are their largest since February. Nomura and Jefferies do not provide monthly sales estimates for Toyota and Kia.

A surge in domestic sales of more-expensive SUVs last year has extended into 2024 and benefitted companies including Mahindra and Toyota, whose portfolios consist almost entirely of utility vehicles. Maruti Suzuki, which dominates the cheaper small-car segment, will report its June sales later in the day.

Meanwhile, domestic demand recovery in rural areas outweighed weak exports, helping motorcycle-maker Bajaj Auto record a 5.1% growth in two-wheeler sales. While this beat Nomura's estimate of a 1% decline, it missed Jefferies' estimate of 10% growth.

Rural two-wheeler sales have recovered from weakness through fiscal 2024, which had hurt entry-level sales for motorbikes such as the Bajaj Platina. The rural sector accounts for more than half of India's total two-wheeler sales, according to a 2023 report by motorcycle maker Hero Motorcorp.