Auto companies align dispatches with retail demand amid stock pileup

Passenger vehicle dispatches rise just 0.5% in H1 2025 as OEMs curb factory output to align with slower retail demand and elevated dealer stock levels

Manufacturers of passenger vehicles (PVs) in the first half of the calendar year (2025) reported a modest 0.5 per cent year-on-year increase in wholesale dispatches, while retail sales grew 2.5 per cent for the same period, reflecting a calibrated approach by automakers amid elevated dealership inventories and cautious consumer sentiment. 

 

According to the Society of Indian Automobile Manufacturers (Siam), dispatches rose marginally to 2,164,785 units, up from 2,152,828 units a year earlier.

 

Retail sales, meanwhile, grew at a stronger pace of 2.5 per cent during the same period, reaching 2,069,796 units, according to the data from the Federation of Automobile Dealers Associations (Fada), compared to 2,018,731 units last year. 

 

Industry analysts say this data signals a broader industry shift, by which factory output is becoming more closely aligned with market demand, as original equipment manufacturers (OEMs) adopt leaner, demand-driven inventory strategies.

 

Automakers are increasingly synchronising factory output with retail movement in a bid to avoid a stock buildup across dealership networks.

 

“Dealership inventory levels continue to remain elevated — well above the 50-day mark — which has prompted OEMs to moderate dispatches,” said Anurag Singh, advisor, Primus Partners. “This is a prudent and necessary step because it helps maintain market discipline and avoids inventory overhang across the retail network.”

 

Singh added inventory levels varied widely across regions, depending on the model, variant, and even colour preferences. 

 

“Ahead of the festival season, dealers typically build inventories to cater to time-sensitive demand, but for now, factory output is closely tracking actual sales trends.”

 

Despite the 2.5 per cent increase in retail sales over the first half of the calendar year, high inventories persist.

 

Fada notes meaningful stock correction will occur only if OEMs significantly scale down factory dispatches below retail volumes.

 

“OEMs must recalibrate at a much bigger pace. Maintaining current levels won’t help anyone,” said C S Vigneshwar, president, Fada.

 

Honda Cars India is aligning output with market demand by focusing on retail deliveries over wholesale dispatches.

 

“With a favourable monsoon this year and the onset of the festival period starting with Onam, we are optimistic of an uptick in demand and have planned to ensure our models are available across the country,” said Kunal Behl, vice-president, marketing and sales, Honda Cars India.

 

“We will enhance our marketing campaigns and introduce exciting product updates to catch the festive fervour.”

 

Maruti Suzuki, Mahindra & Mahindra, Hyundai Motor India, Kia, and Toyota did not respond to queries, citing the ongoing silent period ahead of their upcoming financial results.

 

Among OEMs, Maruti Suzuki recorded a 4.5 per cent increase in PV production during January-June. The company produced 10,72,805 units compared to 10,25,862 units during the same period last year.

 

Growth was strongest in March, around 17 per cent, and in April, at 6.2 per cent, while June saw a 4.2 per cent year-on-year decline in output.

 

Maruti is also one of the leading PV exporters from the country. 

 

Hyundai Motor India, in contrast, saw a marginal contraction of 0.6 per cent in production during the same period. The company produced 3,81,700 units in H1 2025 compared to 3,84,112 in H1 2024. While April and May showed growth of 7.8 per cent and 3.5 per cent, respectively, the rest of the months showed declines, with June declining the highest fall at 7.5 per cent.

 

Mahindra & Mahindra posted the most robust growth among major OEMs, with a 25.2 per cent increase in PV production. The company produced 3,29,621 units in H1, up from 2,63,099 units in the same period last year. Each month recorded double-digit growth, with March recording 42.3 per cent, May 34.2 per cent and April 32.2 per cent being the standout months.

 

Domestic wholesale figures for the first half of 2025 showed M&M as the strongest performer among major passenger vehicle manufacturers, registering 20.2 per cent year-on-year growth with dispatches rising to 3,01,194 units from 2,50,348 units in H1 2024. 

 

The company posted double-digit growth every month, with the highest surge of 27.5 per cent recorded in April.

 

Maruti Suzuki, the market leader, saw a marginal decline of 2.2 per cent in total wholesales, which stood at 8,78,705 units in H1 2025 compared to 8,98,905 units a year ago. While it witnessed modest gains in January, February, and April, significant drops in May, around 5.5 per cent, and June, around 13.3 per cent, offset the earlier momentum.

 

Hyundai, meanwhile, faced sustained pressure across the board, reporting a 7.7 per cent year-on-year decline in wholesales. Volumes dropped to 2,85,809 units in H1 2025 from 3,09,772 units in the corresponding period last year, with sharp double-digit declines -- in April of around 11.6 per cent, in May of around 10.7 per cent, and in June of about 12 per cent.

 

Meanwhile, retail PV sales saw a strong start in January with a 15.5 per cent jump year-on-year, but subsequent months have seen a mixed performance, reflecting broader macroeconomic headwinds and subdued buyer sentiment.

 

Maruti Suzuki registered a 2.16 per cent year-on-year increase in its domestic retail sales for the first half of 2025, with sales rising to 8,33,110 units compared to 8,15,476 units in the same period last year. January was a standout month, witnessing 20.2 per cent growth, while March and June posted marginal gains of 3.08 per cent and 0.5 per cent, respectively. However, sales dipped in February by 11.2 per cent, in May by 5.1 per cent, and slightly in April by 0.8 per cent, indicating patchy consumer sentiment despite overall growth.

 

Hyundai saw a decline of 6.5 per cent in its retail domestic sales in H1 2025, delivering 2,60,662 units against 2,78,930 units in H1 2024. While January showed healthy traction with a 13 per cent increase, the company experienced sharp declines across the other months — the steepest in February, falling by 19.7 per cent, followed by May, declining 16 per cent, and April, by 11.3 per cent with March witnessing a decline of 4.5 per cent and a smaller drop in June by 2.2 per cent. 

 

M&M continued its strong upward momentum in the domestic retail market, with sales growing 16.5 per cent year-on-year to 2,70,984 units in H1 2025, up from 2,32,517 units a year earlier. Growth was broadbased, with double-digit gains in January of around 20 per cent, in March of about 16 per cent, in April of around 25 per cent, in May around 26 per cent, and in June around 11.3 per cent. February remained flat with a marginal 0.4 per cent uptick, suggesting resilient demand for Mahindra’s SUV-heavy portfolio.

 

“Growth in retail sales has been moderate, reflecting broader economic conditions. The pace of sales is aligned with macroeconomic indicators, suggesting that the current trend is more of a steady normalization than a sharp upswing,” Singh noted.

 

Fada expects the near-term outlook for PVs to remain mixed, shaped by high base effects, limited new model launches, and tighter financing conditions.

 

While festival-season planning and new incentive schemes could offer some tailwinds, overall dealer sentiment remains cautious, with only 38 per cent of PV dealers reporting healthy enquiry levels heading into July 2025.

 

“Although upcoming festive offers and incentive schemes could support sales, booking traction remains uneven, and dealer sentiment is tilted toward flat or declining volumes in the near term,” Fada noted.