Home > Auto News > Dull December caps a year to forget for automakers

MUMBAI : Passenger vehicle makers in India sold 14% fewer units in 2019 than in the previous year, as prospective customers deferred purchases in a year marked by a grinding slowdown, liquidity crisis and confusion over new emission norms.

India’s top seven auto manufacturers that make up most of passenger vehicle (PV) sales reported dispatching 2.67 million passenger vehicles to dealerships in 2019—including numbers for December released on Wednesday— against 3.12 million the previous year. Automakers in India count dispatches to dealers as sales.

In 2019, manufacturers resorted to sharp production cuts and tempted buyers with deep discounts to reduce inventory and fight a slowdown triggered by the defaults by Infrastructure Leasing and Financial Services Ltd in September-October 2018.

Overall, PV sales in December fell 6% from a year ago, even as automakers prepare for transition to Bharat Stage VI (BS-VI) emission norms.

Driven by a base effect and aggressive year-end discounts, the country’s largest carmaker Maruti Suzuki India Ltd (MSIL), reported a 2.5% increase in domestic vehicle wholesales at 124,375 units in December, against 121,479 units a year ago. Besides passenger vehicles, Maruti’s total domestic wholesales include light commercial vehicle volumes, which reported a year-on-year (y-o-y) drop of 5% at 1,591 units last month. Discounts in December, offered across Maruti models, were much higher than in previous years, dealers said on condition of anonymity.

Dealer network stock had reduced to the lowest level, said the president of Tata Motors’ PV business unit
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Dealer network stock had reduced to the lowest level, said the president of Tata Motors’ PV business unit

Compact and utility vehicle (UV) segments drove Maruti’s y-o-y growth in December sales. While the compact segment reported sales of 65,673 units—up 28%—UVs recorded a growth of 17.7% y-o-y at 23,808 units. Maruti’s compact car portfolio includes models such as the popular hatchbacks Swift, Baleno, Celerio, new Wagon R and compact sedan Dzire. It sells the Ertiga, XL6, Vitara Brezza and S-Cross in its UV portfolio.

Maruti’s entry-level or mini category, which includes the recently launched S-Presso, reported wholesales of 23,883 units, down 13.6% y-o-y.

Hyundai Motor India Ltd (HMIL), the second-largest car maker, reported a sales drop of 10% y-o-y at 37,953 units in December as against 42,093 units a year ago. The decline came as it continues to adjust production at its Chennai unit. “The year 2019 has been a challenging year for the Indian automotive industry," said Tarun Garg, director of sales, marketing and service at HMIL. Hyundai expects substantial volumes from its compact sedan Aura to be launched later this month.

Mahindra and Mahindra Ltd (M&M) posted sales growth of 4% at 15,691 units in December against 15,091 units a year ago. Its UV portfolio, which includes the Scorpio, XUV500 and XUV300, posted wholesales volumes at 15,225 units, up 10% y-o-y. Volumes for the car and van category, however, stood at 466 units against 1,200 units a year ago. “Our performance in the month of December is as per year- end sales outlook and currently we are also comfortable with our overall stock levels," said Veejay Ram Nakra, chief of sales and marketing-automotive division , adding that M&M is fully equipped to roll out BS-VI products.

Tata Motors Ltd posted a 10% y-o-y fall at 12,785 units in December. Mayank Pareek, president of the passenger vehicles business unit at Tata Motors, said the dealer network stock has been reduced to the lowest level, and production and despatches of BS-VI cars will rise from January. Honda Cars India Ltd which posted a decline of 36% y-o-y at 8,412 units, said it has exhausted the BS-IV stock at the factory level.

Puneet Gupta, associate director of IHS Markit, said 2019 was the worst in the last two decades for India’s auto industry, which saw plant shutdowns, dealership closures and postponement of investment plans. “We did not begin CY2019 on such a note as industry expected stability, recovery and progressive business environment under Modi 2.0. However, the reverse happened as economy deteriorated, NBFC crisis got swollen up as government decisions were more political in nature and did not focus on the economy," he said. The government’s decisions were more long term in nature, he added.

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