Automakers See Weak Sales Despite Growth, Low Inflation

Maruti, Mahindra, others hope upcoming festive season, low interest rates will spur a revival

- Ayaan Kartik

India's high economic growth and falling inflation have failed to accelerate sales of cars and 2-wheelers, with the country's largest automobile firms such as Maruti Suzuki India Ltd, Honda Motorcycle and Scooter India, Mahindra and Mahindra Ltd, and Hero MotoCorp Ltd flagging weak demand. Both Maruti and Honda have raised the alarm bells about the disposable income available in the hands of consumers, which is hurting demand for their products. Other automakers are pinning hopes on the upcoming festive season and lower interest rates for a revival.

The concerns over the demand environment were repeatedly raised during the April-June earnings calls of companies held in the last one week. This comes even as the country's GDP grew at a healthy 6.5% in FY25, with the January to March period seeing a 7.4% expansion. Moreover, retail inflation cooled to a 77-month low of 2.1% in June.