Home >Auto News >Aided by discounts, passenger vehicle sales rebound in January

NEW DELHI : Retail sales of passenger vehicles in India rebounded sharply in January as auto makers offered a range of discounts to clear unsold stocks while slowing dispatches of new vehicles to dealers to help trim inventory.

Sales of trucks and buses as well as two-wheelers, however, remained subdued last month, showed data issued on Thursday by lobby group Federation of Automobile Dealers Associations (FADA).

Registrations of cars, sport-utility vehicles (SUVs) and minivans surged 34% in January, when compared with the preceding month, to 271,395 units, indicating an uptick in consumer sentiment in the domestic market.

Retail sales of passenger vehicles had fallen 3% to 202,585 units in December despite a host of year-end discounts by companies.

Most of the top auto makers recorded either a small increase or a decline in factory dispatches, or wholesales, in January to help dealers control their inventory.

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(Vipul Sharma/ Mint )

The dealers were saddled with unsold stocks because of subdued consumer sentiment in 2018 amid higher fuel costs and financing rates.

Wholesales at Maruti Suzuki India Ltd, the largest carmaker, rose a marginal 1% year-on-year in January to 140,600 units.

Second-ranked Hyundai Motor India Ltd reported a similar 0.6% increase to 45,803 units in wholesale dispatches.

Wholesales at Mahindra and Mahindra Ltd increased by just 1% year-on-year to 23,872 units in January, but Tata Motors Ltd posted a 11% decline to 17,826 units.

Domestic auto makers report their monthly sales performance in wholesales and not retail sales.

Ashish Harsharaj Kale, president, Federation of Automobile Dealers Associations, said consumer interest, which had remained buoyant, has slowly begun to convert into retail sales.

“As predicted, healthy inquiry levels seen in December finally showed signs of conversions with the offers at the end of the calendar year continuing in January, especially by passenger vehicle manufacturers, which has helped the customer in making the final purchase," said Kale.

Retail sales of commercial vehicles increased by 0.04% month-on-month to 53,732 units in January, as fleet owners refrained from replacing their existing vehicles or adding new ones.

A liquidity crunch at non-banking financial companies has slowed down credit flow to fleet operators, while revised axle norms has increased the load carrying capacity of trucks.

Tata Motors, the largest commercial vehicle maker, has reported a 9% year-on-year decline in sales to 11,694 units in January. Overall, sales of commercial vehicles fell 6% year-on-year to 37,089 units.

In the motorcycle and scooter segment, retail sales grew at a modest 4.2% sequentially in January to 1.19 million units as an increase in third-party insurance and farm distress continued to hit consumer sentiment.

Most of the major two-wheeler companies such as Hero MotoCorp Ltd and Eicher Motors Ltd recorded weaker wholesales in January.

Dealers had an average inventory of 30-35 days in January for passenger vehicles, according to data collated by FADA.

For two-wheelers, inventory continued to remain at 50-60 days, while commercial vehicle dealers had stocks that can last 30-35 days.

“Two-wheeler growth rates are not at a healthy high. Growth in commercial vehicle sales is also flat and has substantially dropped from the high growth rate the segment had maintained through year to date," said Kale.

The automobile industry went through a tough time in the second and third quarters of the current fiscal due to higher diesel and petrol prices, and the liquidity crisis at non-banking financial companies.

Hence, retail sales of automobiles across the segments declined substantially.

Most manufacturers rolled out huge discounts to woo customers in December and January.

Maruti Suzuki, India’s largest vehicle manufacturer, reported the highest ever retail sales in December, on the back of huge discounts offered by the car maker on some of its most popular products.

Taking cognizance of the huge inventory at dealerships, Hero MotoCorp, the country’s largest two-wheeler manufacturer, wrote to its channel partners in January, about how the company plans to tackle the situation in the months ahead.

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