Auto sales cool off in October on inventory readjustment
Mumbai: Auto sales of most manufacturers cooled in October as dispatches to dealers moderated after the festive season ended on 19 October, with Diwali. Auto firms in India count dispatches to dealerships as sales.
The top five passenger vehicles makers—Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Mahindra and Mahindra Ltd, Honda Cars India Ltd, and Tata Motors Ltd—sold a cumulative 238,838 units in the month, up 3.7% from a year ago.
Market leader Maruti Suzuki India Ltd led sales in the month. The local arm of the Japanese carmaker sold 135,128 units, up 9.25% over a year ago.
Sales were driven by a 29.8% increase in the utility vehicles segment on the back of new launches, including a refreshed version of the premium compact sport utility vehicle, or SUV, S-Cross.
This more than compensated for the 4.2% fall in the sales of old workhorse models such as the Alto and WagonR.
Sales of the Ciaz sedan fell 35.4% as buyers shunned the hybrid version after a price hike of Rs80,000 following an increase in the Goods and Services Tax (GST) rate.
Tata Motors’s sales growth was just 1% in October. Mayank Pareek, president of the passenger vehicles unit at the company, attributed it to fewer working days in October.
Sales at Mahindra also fell 5.4% to 23,413 units during the month.
Rajan Wadhera, president of the automotive sector at Mahindra, attributed the decline to tapering demand after the festive season and a higher base the previous year.
He added that new variants of the KUV100 and XUV500 models will help “sustain the growth momentum for the remaining period of the current financial year”.
Honda Cars too reported an 8.5% decline in sales to 14,234 units in October.
The decline was due to “some market disruptions on account of the GST and additional cess implementation that resulted in pre-buying ahead of festive period this year,” said Yoichiro Ueno, president and CEO at the company, in a statement.
During the month, Honda also faced supply constraints in some components that affected production of some models.
Ford India Pvt. Ltd reported a 43.8% decline in sales to 4,218 units. Anurag Mehrotra, president and managing director of Ford India, said customers had postponed purchases, opting to wait for the introduction of the new Ford EcoSport model on 9 November.
Analysts say an inventory readjustment was inevitable since the festive season was spread over two months this year.
“The festive came later last year so there is a higher base effect,” said Subrata Ray, senior vice-president (corporate sector ratings) at ICRA.
The hike in the GST cess on 11 September left some customers disappointed even though it had been expected, he added.
“We expect a shift in preference from the larger cars to smaller ones, while maintaining a 10% growth rate in passenger cars for the remainder of this fiscal,” he said. Overall, Ray expects demand to remain robust as economic growth improves.
“The good effects of the GST implementation will soon set in,” he added. The Indian economy advanced by 5.7% in the June quarter, the slowest pace in three years. Economists as well as the Reserve Bank of India expect growth to pick up in the second half of this fiscal.
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