Retail sales of PVs fell by just 1% y-o-y, with manufacturers cutting wholesale dispatches
Retail sales of PVs fell by just 1% y-o-y, with manufacturers cutting wholesale dispatches

Production cuts restrict decline in retail sales of vehicles to 7.5% in May

  • Demand slump in both urban and rural markets led to a year-on-year decline of 8.6% in sales of two-wheelers
  • Customers’ decision to wait for the general elections results before making a big-ticket purchase, also contributed to the demand slowdown

New Delhi: Retail sales of vehicles across categories declined by 7.5% to 1.77 million units in May, impacted by a slowing domestic economy and continuing liquidity crisis in non-banking financial companies, shows data published by Federation of Automobile Dealers Associations.

The decline in retail sales of passenger cars was halted after significant production cuts by manufacturers, but two-wheeler and commercial vehicle sales fell significantly.

Retail sales of passenger vehicles decreased by just 1% year-on-year to 251,049 units, with manufacturers reducing wholesale dispatches.

Maruti Suzuki India Ltd, the country’s largest auto manufacturer, reduced wholesale dispatches by 23% to 125,552 units, Hyundai Motor India Ltd by 5.6% to 42,502 units and Mahindra and Mahindra Ltd by 1% to 20,608 units. Maruti Suzuki also cut production by 18%, due to weak retail demand.

According to the Siam, sales of passenger vehicles declined by a whopping 20.5% in May. The lobby group said the rate of decline was the biggest since the 22% fall in September 2001. This was the seventh consecutive month of falling passenger vehicle sales.

Lack of credit from NBFCs, revised axle norms for medium and heavy trucks, and slowdown in manufacturing led to a 7.8% year-on-year drop in commercial vehicle sales to 62,551 units.

The demand slowdown for consumer goods in both urban and rural markets led to a year-on-year decline of 8.6% in sales of two-wheelers to 1.4 million units. The trend started in the second half of the last fiscal year following an increase in insurance premium, which led to a price increase of around 10%. According to Siam, wholesale volumes of scooters declined by 7.8%, while motorcycles sales fell by 4.8% as a result of the distress in the farm sector.

According to Asish Harsharaj Kale, president, Fada, the increase in two-wheeler inventory is a matter of concern and Fada has asked manufacturers to reduce supplies. It will also request automobile manufacturers to maintain an inventory of 21 days.

“It should also be noted that May 2018 had a very high base as vehicle registrations were the second highest. Dealer liquidity also continues to be negative and extremely tight," added Kale.

Customers’ decision to wait for the general elections results before making a big-ticket purchase, also contributed to the demand slowdown.

This story has been published from a wire agency feed without modifications to the text.

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