BS-VI transition, economic slowdown drag auto sales down 19.8% in Feb

Automobile sales in India across categories declined 19.08 per cent in February as economic slowdown continued to hit demand, besides lower production in view of transition to BS-VI emission norms affecting wholesale dispatches, auto industry body SIAM said on Friday.

Vehicle sales across categories stood at 16,46,332 units last month as against 20,34,597 units in February 2019, according to data released by the Society of Indian Automobile Manufacturers (SIAM).

"The decline in wholesale dispatches is primarily due to economic slowdown and lower production of BS-IV vehicles. Some upside on the registration numbers of VAHAN can be attributed to last-minute purchase by customers trying to advance purchase of BS-IV vehicles," SIAM President Rajan Wadhera said in a statement.

He further said, "Supply chain disruptions from China is also a concern, which may impact the production plans for companies going forward" while welcoming the government's step to issue a "notification of Force Majeure for coronavirus and 24x7 clearance of shipments at all customs formations".

According to SIAM, domestic passenger vehicle sales declined by 7.61 cent to 2,51,516 units in February from 2,72,243 units in the year-ago month. Car sales last month were also down 8.77 per cent at 1,56,285 units as against 1,71,307 units in February last year.

Market leader Maruti Suzuki India's passenger vehicles sales declined by 2.34 per cent last month at 1,33,702 units. Rival Hyundai Motor India also witnessed decline of 7.19 per cent at 40,010 units, while new entrant Kia Motors took the third position during the month selling a total of 15,644 units.

Total two-wheeler sales in February fell by 19.82 per cent to 12,94,791 units as compared to 16,14,941 units in the same month last year, SIAM added.

Market leader Hero MotoCorp reported total two-wheeler sales of 4,80,196 units last month, down 20.05 per cent. Rival Honda Motorcycle & Scooter India also saw a decline of 22.83 per cent at 3,15,285 units last month.

Similarly, Chennai-based TVS Motor Co also suffered a drop of 26.73 per cent at 1,69,684 units last month, SIAM said.

Overall motorcycle sales last month declined by 22.02 per cent at 8,16,679 units as against 10,47,356 units in the year-ago period. Scooter sales were down 14.27 per cent at 4,22,310 units last month as compared to 4,92,584 units in February last year.

Sales of commercial vehicles were down 32.9 per cent to 58,670 units in February as against 87,436 units in the same month last year, SIAM said.

Auto sales growth outlook revised to 5-7% for FY20, says report

Automobile sales, excluding tractors is expected to grow 5-7 per cent this fiscal owing to factors such as higher vehicle prices, financing issues and higher insurance cost among others, Care Ratings said on Friday.

The agency revised its outlook after industry volume witnessed sharpest decline at 13.3 per cent in April-August over the year-ago period.

The auto sales in the same period last year registered a double-digit growth at 14.5 per cent, it said.

Such double-digit drop (13.3 per cent) was witnessed during the same period in the fiscal 1993, when sales declined by over 21 per cent year-on-year, it said.

The decline in sales in FY20 was led by a 15-20 per cent price hikes due to new safety norms, higher insurance and ownership costs, liquidity crisis in the NBFC sector and increased load carrying capacity for medium and heavy commercial vehicles that led to high inventories causing slow movement in movement of vehicles, Care Rating said

"We have therefore revised our outlook for overall auto sales (excluding tractors) to 5-7% for FY20," it said.

However, in August, the sales of passenger cars and three wheelers have witnessed growth of about 1.8 percent and 9 percent, respectively, on month-on-month basis, while the decline in sales of commercial vehicles and two wheelers have narrowed down to 7.4 per cent and 0.3 per cent month-on-month, respectively, as against a decline of 17.5 percent and 6.6 percent during the previous month, the rating agency said.

The sales growth during the period was largely restricted on account of weak demand for commercial vehicles and passenger vehicles registering a double-digit decline of 21.5 percent and 18.8 percent y-o-y while decline in sales of two and three wheelers segment was restricted to 12.2 percent during the month.

"Going forward, we expect demand to continue to remain muted during Q2 FY20 and pick up only by Q3 FY20 and continue in Q4 FY20 with various planned product launches, festival demand and pre-buying of automobiles before the implementation of BS-VI norms from April 1, 2020," Care said.