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Business News/ Companies / News/  No respite for auto firms as sales slump 24% in September
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No respite for auto firms as sales slump 24% in September

Eleventh straight month of decline, sharpest fall for motorcycle sales since 1997-98
  • PASSENGER vehicle dispatches fell to 223,317 units in September from 292,660 last year
  • In the year-ago period, passenger vehicle sales stood at 2,92,660 units (Bloomberg file)Premium
    In the year-ago period, passenger vehicle sales stood at 2,92,660 units (Bloomberg file)

    Wholesale dispatches of passenger vehicles slumped 23.7% year-on-year in September, the eleventh straight month of such decline, reflecting the slowdown in the wider economy and an overestimation of pre-festival sales by automakers.

    Dispatches fell to 223,317 units from 292,660 in September in 2018, as the economy grappled with the impact of a protracted slowdown that started with the IL&FS bankruptcy last year.

    Indicating subdued demand in both the rural and semi-urban markets, dispatches of motorcycles during the month witnessed the sharpest ever decline since 1997-98.

    Dispatches of passenger cars fell a massive 33.4% to 131,281 units during the month, but utility vehicles bucked the trend and rose 5.5% year-on-year to 816,25 units, helped by new launches, according to data released by the Society of Indian Automobile Manufacturers (Siam) on Friday.

    The decline in dispatches just before the festive months of September and October indicates subdued expectations of automobile manufacturers from the festive season in October. Usually, festival season sales make up almost a third of total sales during a fiscal year and manufacturers traditionally increase dispatches expecting robust sales.

    Automakers in India report wholesales and not retail sales data on a monthly basis. In the last one year, while wholesales of vehicles have been on double-digit decline, retail sales are expected to have declined in the range of 8-9%, reflecting an overestimation by manufacturers.

    Automakers in the first half of the last fiscal filled their dealers with stocks despite falling showroom sales in the aftermath of IL&FS bankruptcy. As a result, this year, manufacturers held back on dispatches to clear existing stocks.

    The commercially important festival season kicked off with Onam in September, continued with Navratri beginning 29 September and heads into Diwali on 27 October.

    Across categories, vehicle sales in September fell a significant 22.4% year-on-year to 2,004,932 units, due to a slowdown in the economy, floods in some states and lack of credit availability from financial institutions. Sales across segments saw high double-digit decline, barring those of three-wheelers, which declined by a modest 3.92 %.

    On a sequential basis, though, sales have picked up from September when wholesales dipped to an all-time low. In July and August, Maruti Suzuki’s factory dispatches fell below the 100,000-unit mark as the company cut production and dispatches. In September, it dispatched 112,500 units to dealers. Hyundai also touched the 40,000-unit mark in September after slipping to 38,205 units in August. This trend is visible in the wholesales of most of four- and two-wheeler manufacturers.

    According to Siam president Rajan Wadhera, the festive season has started on a good note and going forward, demand is likely to revive in the rural market owing to a good monsoon, fiscal measures taken by the union government and improved availability of finance options. Manufacturers have also increased production expecting sales to pick up in October.

    Vehicle manufacturers across segments have been offering significant discounts to lure customers back to the showrooms and help clear the stocks.

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    Published: 11 Oct 2019, 12:22 PM IST
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