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The Indian auto sector experienced a significant surge in December 2024, leading to a remarkable rally in auto stocks and propelling the Nifty Auto index to its highest point in six months. This upswing was primarily driven by exceptionally strong sales figures reported by major players in the industry, exceeding market expectations. The positive momentum was visible across the board, with prominent automakers like Eicher Motors, Bajaj Auto, Hero MotoCorp, Mahindra & Mahindra, Maruti Suzuki, and Tata Motors witnessing substantial gains in their share prices. The overall market sentiment was significantly boosted by these impressive results, indicating a potential turnaround for the sector after a period of relative slowdown. The strong performance was not merely a one-day phenomenon; many companies continued their upward trajectory for several consecutive trading days.
Eicher Motors emerged as a star performer, registering a noteworthy 7 percent increase in its share price. This impressive growth was directly linked to a phenomenal 25 percent year-over-year jump in December sales, reaching a total of 79,466 units. The company’s export figures were particularly noteworthy, showcasing a staggering 90 percent surge compared to the same period in the previous year, with over 11,000 units of Royal Enfield motorcycles exported. This strong export performance underscores the growing global demand for Indian-manufactured vehicles, contributing to the overall positive outlook for the sector. The exceptional performance of Eicher Motors served as a powerful catalyst for the broader market, driving investor confidence and attracting further investment into the auto sector.
Maruti Suzuki India Ltd (MSI) also contributed significantly to the positive market sentiment. Its shares experienced a 5 percent rally on January 2nd, extending gains from the previous trading day. This growth was attributed to upbeat comments from the company’s management regarding the robust December sales figures. Partho Banerjee, Senior Executive Officer – Marketing & Sales at Maruti Suzuki, highlighted the exceptionally strong demand, noting that dealer inventories were only sufficient to cover nine days of sales and that the company had a substantial backlog of over 200,000 pending bookings. Maruti Suzuki reported a 30 percent increase in total wholesales, reaching 178,248 units in December 2024 compared to 137,551 units in the same month of the previous year. The company's strong sales performance and positive outlook significantly influenced investor confidence and fueled the overall market rally.
Mahindra & Mahindra further reinforced the positive trend, extending its gains for a second consecutive session. The company reported an 18 percent surge in sport utility vehicle (SUV) sales to dealers in December, reaching 41,424 units. This impressive growth highlights the resilience of Mahindra, India’s second-largest SUV manufacturer by market share, amidst a broader slowdown in the automotive sector. The company’s robust performance, even while other manufacturers were forced to offer significant discounts to stimulate sales, underscored the strength of its brand and product offerings. The consistent demand for Mahindra vehicles prompted Citigroup to maintain its 'buy' rating on the stock, citing strong volume momentum throughout 2024. The impressive growth in domestic UV volumes indicates the success of recent model launches, further bolstering the positive market sentiment.
Tata Motors also experienced positive growth, with its share price jumping by as much as 2 percent. While the growth was less dramatic than other companies, with a 1 percent year-on-year increase in December sales to 76,599 units, the positive trend contributed to the overall positive market sentiment. Hyundai Motor India also saw a significant rally, with its shares rising by over 2 percent following the unveiling of its highly anticipated Hyundai CRETA Electric. This launch represents a strategic move into the growing electric vehicle market in India, offering the potential for future growth and increased market share. The positive response to the launch further supported the bullish sentiment in the auto sector. The Nifty Auto index closed the day at 23,797, reflecting a 2.8 percent increase from the previous day’s close, showcasing the strong overall performance of the sector.
In conclusion, the December 2024 sales figures for the Indian auto industry have been undeniably strong. The robust growth across major players, coupled with positive management commentary and significant new product launches, has fueled a considerable surge in auto stocks and significantly boosted the Nifty Auto index. This positive momentum suggests that the Indian automotive sector is on a path toward recovery and significant growth in the near future. The strong demand for vehicles, both domestically and internationally, positions the sector for further expansion and continued investor interest. However, it is crucial to note that market conditions can be highly volatile, and investors should exercise caution and consult with financial advisors before making any investment decisions.
Source: Auto stocks rev up as December sales surge drives Nifty Auto to a 6-month high