Active Stocks
Tue Mar 19 2024 12:10:55
  1. Tata Consultancy Services share price
  2. 4,018.50 -3.05%
  1. Tata Steel share price
  2. 148.25 -0.90%
  1. Bharti Airtel share price
  2. 1,232.60 0.62%
  1. Power Grid Corporation Of India share price
  2. 260.35 -1.75%
  1. ITC share price
  2. 410.25 -1.71%
Business News/ Auto / Auto sales in November skid on inventory, liquidity issues
BackBack

Auto sales in November skid on inventory, liquidity issues

Truck sales fell in November for the first time in 2018-19 on crimped orders from fleet operators

Sales fell as purchasing power of customers took a hit due to a shortage of credit from NBFCs and higher loan rates. Graphic: MintPremium
Sales fell as purchasing power of customers took a hit due to a shortage of credit from NBFCs and higher loan rates. Graphic: Mint

New Delhi: Domestic sales of bigger trucks and buses fell in November for the first time this fiscal as a liquidity squeeze at non-banking financial companies (NBFCs) crimped orders from fleet operators.

Passenger vehicle sales, too, fell last month because of continued weak consumer sentiment, forcing companies to slow down dispatches to dealerships to avoid an inventory buildup.

Data by the Society of Indian Automobile Manufacturers (Siam) on Monday showed sales of medium and heavy commercial vehicles (M&HCV) dropped 11% from the year earlier in November to 25,363 units. Sales of bigger trucks declined 11% while bus sales fell 6.9%.

Sales of light commercial vehicles—used mainly for intracity transport—however rose 17% to 47,449 units last month. Auto sales in India are measured as factory dispatches and not retail sales.

Vishnu Mathur, director general of Siam, said M&HCV sales fell as purchasing power of customers took a hit due to a shortage of credit from NBFCs, higher loan rates and poor macroeconomic conditions.

“Demand for tippers continues to be high since spending on infrastructure by the Union government continues to be strong. In goods carriers, most the purchases have been postponed," said Mathur.

Ashish Modani, assistant vice-president for corporate sector ratings at rating agency Icra Ltd said the downturn in the M&HCV segment is expected to continue in the near term as liquidity improves gradually and demand stabilizes.

In the car and sport-utility vehicle segment, most of the manufacturers adjusted their inventories last month as dealers are saddled with unsold vehicles after an underwhelming festive season.

SUV sales fell 10% from the year earlier in November to 69,884 units, while car sales declined 0.9% to 179,783 units. Sales of vans however recorded a 0.8% rise to 16,333 units. Overall, domestic passenger vehicle sales fell 3.4% in November to 266,000 units.

“In November, the passenger vehicles sales were down because of the inventory correction by the companies. The dealers already have huge stocks with them after a poor festive season sales," said Mathur. He said customer sentiment continued to be affected by higher cost of insurance as well as loan rates.

Modani at Icra said passenger vehicles are “likely to remain tepid in the near term, with some improvement expected during Q4 FY2019e."

Unlike the commercial vehicle sector where NBFCs play a vital role in retail financing, passenger vehicle retail sales are largely funded by banks and hence liquidity related pressure shouldn’t have any material impact on passenger vehicle sector," he added.

On the back of sustained demand from the rural markets, motorcycle sales grew 9.3% y-o-y in November to nearly 1.05 million units. Scooter sales increased 3% y-o-y to 521,452 units. The overall two-wheeler industry posted a 7.1% increase in sales to more than 1.64 million units last month.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 11 Dec 2018, 04:17 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App