Passenger vehicle manufacturers took to a cautious approach while dispatching vehicles to the respective dealerships in January, as retail sales continue to decline due to subdued customer sentiment across the country. The top four passenger vehicles manufacturers – Maruti Suzuki India Ltd, Hyundai Motor India Ltd , Mahindra and Mahindra ltd and Tata Motors Ltd – reported flat growth or decline in wholesales in order to balance the inventory at dealerships.
The wholesales of Maruti Suzuki India Ltd--country’s largest vehicle manufacture – increased by 1% year-on-year to 140,600 units, indicating that all is not well for the automotive industry. Hyundai also reported a marginal increase of 0.6% y-o-y to 45,803 units in its wholesale dispatches.
Mahindra and Mahindra Ltd also saw its sales increase by just 1% y-o-y to 23,872 units while Tata Motors saw volumes decline sharply by 11% y-o-y to 17,826 units.
Honda Cars India Ltd has been the only exception since its sales increased by a whopping 23% y-o-y to 18,261 units.
“The first month of the new calendar year continues to be on an overall growth path. There is buoyancy in rural growth, commodity costs are levelling, fuel prices are coming down and we see improvement in forex movement, which in turn will drive positive customer sentiment," said Rajan Wadhera, president, automotive sector, Mahindra and Mahindra.
Wholesales over the last two months have been under pressure since the automobile companies have been correcting the inventory piled up at dealerships since decline in customer sentiment resulted in worst retail sales in six year during the festival period of Navaratri and Diwali.
Most of the passenger vehicle manufacturers still have substantial inventory with dealers which will prevent them from pushing more wholesales on the dealers.
On the other hand, wholesales of commercial vehicles continue to decline as result of the liquidity crisis in non-banking financial corporations and introduction of the new truck axle norms which has increased the load carrying capacity of the vehicles.
Tata Motors Ltd--country’s largest commercial vehicle manufacturer--reported a staggering 9% y-o-y decline in sales to 11,694 units. Overall, sales of commercial vehicles also declined by 6% y-o-y to 37,089 units.
Ashok Leyland Ltd--country’s second largest commercial vehicle manufacturer--though reported a 13% increase in medium and heavy vehicle sales after double digit decline in the last two months.
“Domestic sales of commercial vehicles have dipped by 6% this month as compared to January 2018. The muted growth of the CV Industry is due to the low customer sentiments with the base effect also playing a role in the in H2 FY19 . Factors like higher interest rates and lagged effect of axle load norms continues to affect our MHCV segment with a drop of 9% in January 2019," said Girish Wagh, president, commercial vehicles, business unit, Tata Motors.