Sales of passenger vehicles continue to decline in June2 min read . Updated: 02 Jul 2019, 12:55 AM IST
- Initial reports from automakers suggests a y-o-y decline of over 16% in the segment
- Maruti Suzuki reports a decline in sales across categories
MUMBAI : Passenger vehicle (PV) sales in India continued their downward spiral in June as automakers curbed factory dispatches to control inventory at dealerships.
Initial reports from the top companies suggest a year-on-year (y-o-y) decline of more than 16% for the PV segment and 11% y-o-y drop in two-wheeler sales.
Automobile sales in India are counted as factory dispatches and not retail sales.
The auto industry had anticipated this downtrend for June, but stakeholders are worried as there are no visible signs of recovery as PV sales have fallen 18% y-o-y during Q1FY20.
Domestic sales of market leader Maruti Suzuki India Ltd fell 17% in June to 111,014 vehicles. The Suzuki Motor Corp. unit reported a decline across all categories including mini cars and sport-utility vehicles although sales of its Ciaz sedan and the light commercial vehicle (LCV) Super Carry increased during the month.
Maruti said it sold 1,830 units of its compact hatchback Baleno to Toyota India. Its total domestic wholesales, including LCV and supply to Toyota, stood at 114,861 units in June, down 15% y-o-y.
Sales at Hyundai Motor India Ltd, the second-largest carmaker, fell 7.3% y-o-y to 42,007 units in June. Meanwhile, Mahindra & Mahindra (M&M) emerged as the only automaker that posted an increase in PV sales in June with a 4% y-o-y rise to 18,826 vehicles. This included 17,723 utility vehicles, an 8% rise y-o-y.
Veejay Ram Nakra, M&M’s chief of sales and marketing, automotive division, attributed the performance to the recent launch of three new products.
“However, the market sentiment continued to remain subdued, especially in the passenger vehicles segment. We continue to correct our channel inventory both in the personal and commercial vehicle segments in June," he said.
Sales at Tata Motors Ltd fell 27% y-o-y in June to 13,351 vehicles. The company also has recorded the steepest decline in Q1FY20 volumes amongst all car makers.
“The auto industry has been de-growing for the past 4 quarters. Customer sentiments remained low due to the overall slowdown in economic growth. Consumer expectations on revised GST rate on cars and limited liquidity availability kept them from firming their buying decision this month," said Sibendra Barman, vice president, sales & marketing, passenger vehicle business unit, Tata Motors.
Motilal Oswal Securities said the average inventory levels are stable for Maruti Suzuki at 25-30 days, while it is higher for M&M and Tata Motors at 35-40 days. On the two-wheeler front, it said despite production cuts, inventory levels have increased due to weak demand in June. It forecast that Royal Enfield, which reported a 24% y-o-y drop in sales last month, will continue to see a decline in dispatches.
However, Kavan Mukhtyar, partner & leader, automotive, PricewaterhouseCoopers Pvt. Ltd said the retail story for June 2019 might be relatively better.
“While the wholesale numbers are down clearly because the automakers are cutting factory level dispatches to fix the inventory, the retail story might be better. With a stable government in place, cuts in interest rates, gradually improving consumer sentiments, I expect the retail sales to be in the neutral territory for the overall auto industry," he said.
Mukhtyar said also that although the liquidity crunch exists, the worst is over for the industry as the sentiments will only improve from here on.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.