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Saturday, Oct 19, 2019

India’s passenger vehicle sales slump yet again, down nearly 24% in September

Despatches of passenger cars fell a massive 33.4% to 131,281 units during the month, but utility vehicles bucked the trend and rose 5.5% year-on-year to 816,25 units, helped by new launches.

business Updated: Oct 12, 2019 03:25 IST
Malyaban Ghosh
Malyaban Ghosh
Hindustan Times, New Delhi
The decline in despatches just before the festive month of September and October indicates subdued expectations of automobile manufacturers from the festive season in October.
The decline in despatches just before the festive month of September and October indicates subdued expectations of automobile manufacturers from the festive season in October.(Ramesh Pathania)
         

Wholesale despatches of passenger vehicles slumped 23.7% year-on-year in September, the eleventh straight month of such decline, reflecting the slowdown in the wider economy and an overestimation of pre-festival sales by automakers.

Despatches fell to 223,317 units from 292,660 in September 2018, as the economy grappled with the impact of a protracted slowdown that started with the IL&FS bankruptcy last year.

Indicating subdued demand in both the rural and semi-urban markets, dispatches of motorcycles during the month witnessed the sharpest ever decline since 1997-98.

Despatches of passenger cars fell a massive 33.4% to 131,281 units during the month, but utility vehicles bucked the trend and rose 5.5% year-on-year to 816,25 units, helped by new launches, according to data released by the Society of Indian Automobile Manufacturers (Siam) on Friday.

The decline in despatches just before the festive month of September and October indicates subdued expectations of automobile manufacturers from the festive season in October. Usually, festival season sales make up almost a third of total sales during a fiscal year and manufacturers traditionally increase dispatches expecting robust sales.

Automakers in India report wholesales and not retail sales data on a monthly basis. In the last one year while wholesales of vehicles have been on double digit decline, retail sales are expected to have declined in the range of 8-9%, reflecting an overestimation by manufacturers.

Automakers in the first half of the last fiscal filled their dealers with stocks despite falling showroom sales in the aftermath of IL&FS bankruptcy. As a result, this year manufacturers held back on dispatches to clear existing stocks.

The commercially important festival season kicked with Onam //on zz September/, continued with Navratri beginning 29 September and heads into Diwali on 27 October.

Across categories, vehicle sales in September fell a significant 22.4% year-on-year to 2,004,932 units, due to a slowdown in the economy, floods in some states and lack of credit availability from financial institutions. Sales across segments saw high double-digit decline, barring those of three-wheelers, which declined by a modest 3.92 %.

Earlier in September, Maruti Suzuki India Ltd, the country’s largest passenger vehicle manufacturer, witnessed a 26.7% year-on-year (y-o-y) drop in dispatches to 112,500 units, while Hyundai Motor India Ltd /chk/ reported a 14.8% fall to 40,705 units, despite a healthy response for its first compact sport utility vehicle, the Venue, launched in May.

On a sequential basis, though, sales have picked up from September when wholesales dipped to an all time low. In July and August, Maruti Suzuki’s factory dispatches fell below the 100,000-unit mark as the company cut production and despatches. In September, it dispatched 112,500 units to dealers. Hyundai also touched the 40,000-unit mark in September after slipping to 38,205 units in August. This trend is visible in the wholesales of most of four- and two-wheeler manufacturers.

According to Siam president Rajan Wadhera, the festive season has started on a good note and going forward demand is likely to revive in the rural market owing to a good monsoon, fiscal measures taken by the union government and improved availability of finance options. Manufacturers have also increased production expecting sales to pick up in October.

Vehicle manufacturers across segments have been offering significant discounts to lure the customer back to the showrooms and help clear the stocks.

“Both September and October put together, we are seeing good growth in the last 10-12 days. The retails in the Navratra period this year is higher for some manufacturers compared to last year. Sale of commercial vehicles though is led by economic growth and we hope the positive monsoon will bring enough demand, especially in the light commercial vehicle segment. We have to wait till October to make a meaningful forecast (for the rest of the fiscal). The festive season could start a recovery but we will have to wait for that,” said Wadhera.

India’s economy has shown little or no signs of recovery from a slump in consumption, prompting the Reserve Bank of India and ratings firm Moody’s Investor Service to sharply cut the GDP growth forecast. This doesn’t augur well for the sector, since automobile sales are one of biggest indicators of economic activity of an economy. RBI has revised GDP growth forecast to 6.2% from 6.9%, while Moody’s cut its forecast to 5.8% from 6.2%.

As a result of the sharp decline in activity in manufacturing and infrastructure, sales of medium and heavy commercial vehicles dropped sharply by 62.1% year-on-year to 14,855 units.

Due to a fall in farm incomes and floods in states like Assam, Bihar, Maharashtra and others, dispatches of two wheelers declined 22% to 1,656,774 units. Motorcycles sales fell by 23.2% to 1,043,624 units, while scooter sales declined 16.6% to 555,829 units.

First Published: Oct 12, 2019 03:25 IST

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