Festive sales help passenger vehicles snap 11-month declining streak in Oct

Attractive consumer offers in the festive season, coupled with brisk growth in utility vehicles (UVs), drove passenger vehicle (PV) sales in India into positive terrain after 11 months of persistent decline, Society of Indian Automobile Manufacturers (Siam) said on Monday.

Automakers in India count dispatches to dealers as sales. However, dragged down by two-wheelers and commercial vehicles, the overall dispatches (all categories) during the month saw a year-on-year (YoY) drop of 12.76 per cent.

Siam expects November and December to show growth over last year. Automakers in India dispatched 285,027 units of PVs, against 284,223 units a year ago.

New model launches in the UV segment drove volume growth to a seven-month high. Sales of such vehicles rose to 100,725 units, against 82,413 units last year.

A low base of last year also aided overall growth in the PV segment. However, volumes are not strictly comparable. Unlike last year, most festivals this year were bunched up in a single month.

The growth in the PV segment was primarily led by car market leader, Maruti Suzuki India, which saw its dispatches to dealers grow 4.4 per cent YoY to 144,277 units after 10 months of drop. It was driven by new launches, such as the S-Presso, a mini sport UV.

Analysts remain cautious in their outlook. “Even as the relative YoY volumes may look better in the next few months as the base effect catches on, we expect absolute volumes to remain under pressure after reduction in consumer offers and end-of-the-festive season,” said Mitul Shah, vice-president, research at Reliance Securities.

Festive sales help passenger vehicles snap 11-month declining streak in Oct

Sales for the rest of the automakers remained negative, even as stock pile-up reduced substantially on the back of heavy discounts. In PVs, the unsold stock at most of the companies have reduced to less than a month, Rajan Wadhera, president, Siam, told reporters in Delhi on Monday, adding Siam expects the momentum in the current and following month to continue. “It will be on a lower base of last year, measures taken by the government, and new launches,” Wadhera added.

He expressed concern over the sales performance of the medium and heavy commercial vehicles in the goods segment. “The heavy commercial vehicles are in serious trouble. It shadows the economy,” said Wadhera, adding, there is a lot more to the steep decline than inventory correction.

International rating agency Moody’s Investors Service changed its outlook for India from ‘stable’ to ‘negative’ last week. The change, it added, “partly reflected the government and policy ineffectiveness in addressing economic weakness, which, in turn, led to an increase in debt burden from already high levels for its action”.

Sales of trucks with a gross vehicle weight of 16 tonne and above fell sharply by 54.97 per cent to 12,797 units over a year ago, as reduced economic activity and an idling fleet of trucks forced transporters to put off purchases.

Wadhera also attributed the sharp fall to the “structured interventions”, such as the new axle norms that allow trucks to load 35 per cent more. There are efforts to improve the economy; hopefully it should work,” he said, alluding to the recent measures announced by the finance minister for the real estate sector.

Meanwhile, two-wheelers sales also continued to hurtle down as manufacturers remained cautious of the ballooning inventory and curtailed dispatches to dealers. Led by motorcycles, which skidded 16 per cent over the same month, the overall sales in the segment dropped 14.43 per cent YoY. Sales of scooters and mopeds, too, dropped 10 per cent and 27 per cent, respectively. Wadhera attributed it to disruptions in rural India on account of an extended monsoon, floods, etc. He expects the segment to revive in the current month, as rural households get cash in their hand after the recent harvest.

Slowdown blues: Auto sales down 23.5%, worst slump in two decades

Passenger vehicle sales in the country declined for the 10th straight month as carmakers resisted increasing inventories at dealerships, signalling that it would be a muted festive season this year.

Domestic sales of passenger vehicles fell 31.6 per cent year-on-year to 196,524 units in August, according to the data released by the Society of Indian Automobile Manufacturers (Siam). That’s the steepest decline since 1997-98 when Siam started recording data.

Two-wheeler sales — a key barometer of the rural economy — also dropped by 22.24 per cent to 1,514,196 units against 1,947,304 units in the same period last year. Companies, wary of piling inventory, resorted to holding onto their stock. They also cut production, which led to a decline in dispatch to dealers.

Dispatches in the passenger vehicles (PV) segment during the month declined. Previously, the steepest decline in the segment was registered in July this year when wholesale figures had fallen 30.98 per cent to 200,790 units. The fall in PV sales in August was also the 10th consecutive month of decline. In fact, all vehicle categories witnessed decline in sales during the month.

In the PV segment, market leader Maruti Suzuki India posted 36.14 per cent decline in its August sales at 93,173 units. Hyundai Motor India also witnessed 16.58 per cent fall at 38,205 units while Mahindra & Mahindra saw a drop of 31.58 per cent at 13,504 units during the month.

Siam said passenger car sales in August were also the worst ever. Last month, domestic car sales were down 41.09 per cent at 1,15,957 units against 1,96,847 units in August 2018. Commercial vehicle sales were down 38.71 per cent to 51,897 units in August compared with 84,668 units in August 2018.

Similarly, motorcycle sales last month declined 22.33 per cent to 9,37,486 units against 12,07,005 units a year earlier. Scooter sales declined by 22.19 per cent to 520,898 units compared with 669,416 units in August last year.

In the two-wheeler category, Hero MotoCorp registered a 20.97 per cent drop in sales at 524,003 units, while rival Honda Motorcycle and Scooter India saw sales decline by 26.26 per cent to 425,664 units.

Similarly, Chennai-based TVS Motor Company saw its sales slump by 20.37 per cent at 219,528 units in August.

On the other hand, retail sales data for August showed a somewhat better picture in terms of sales, pointing to inventory correction taking place in the industry. Total automobile sales declined by 4.15 per cent to 1,600,376 units as compared with 1,669,751 units in August 2018, according to the Siam data.

Passenger vehicle sales dip 31.6% in Aug; down ten months in a row: SIAM

India's domestic passenger vehicle sales fell for the tenth straight month in August, declining 31.57 per cent to 1,96,524 units from 2,87,198 units in the year-ago period.

Domestic car sales were down 41.09 per cent to 1,15,957 units as against 1,96,847 units in August 2018, according to data released by the Society of Indian Automobile Manufacturers (SIAM) released on Monday.

Motorcycle sales last month declined 22.33 per cent to 9,37,486 units as against 12,07,005 units a year earlier.

Total two-wheeler sales in August declined 22.24 per cent to 15,14,196 units compared to 19,47,304 units in the year-ago month.

Sales of commercial vehicles were down 38.71 per cent to 51,897 units in August, SIAM said.

Vehicle sales across categories registered a decline of 23.55 per cent to 18,21,490 units from 23,82,436 units in August 2018, it added.

In fact, all vehicle categories witnessed decline in sales during the month.

Nearly 30 new car, 20 two-wheeler launches lined up till March 2020

Passenger vehicle (PV) and two-wheeler sales in the country have been bleak in the past few months, despite inquiries being good, due to poor consumer sentiment. To create excitement among consumers, especially during festivals, car manufacturers have lined up around 25-30 launches and two-wheeler makers have lined up another 20 between August 2019 and March 2020. The new launches include electric and hybrid vehicles.

On an average, car makers, excluding luxury ones, invest around Rs 1,500-2,000 crore to launch a new car.

Two-wheeler and PV retail sales dropped by five per cent and 4.6 per cent, respectively, in June 2019, compared to last year.

CARE Ratings says that demand might remain muted till the second quarter before it starts picking up from the third quarter due to festival and pre-buying before BS-VI implementation from April 1, 2020. Also, with higher MSPs announced, farm income is expected to be marginally higher and encourage rural spending.

To cash in on this, car makers have lined up nearly 25-30 new launches. Some of them include Maruti Suzuki Ertiga Cross and S-Presso, Hyundai New Grand i10, Tucson Facelift and Hyundai New Elite i20. Honda would be launching Honda HR-V and New City, while Tata would introduce the Buzzard and Altroz. Skoda expects to launch Karoq, and Renault to launch Renault Triber and Kwid Facelift.

Vikas Jain, national sales head, Hyundai Motor India Ltd, said that sometimes, a slowdown in the market is a cyclical phenomenon. Due to practical challenges such as volatility in fuel prices, high interest rates and increase in insurance premium, some of the buyers are deferring their purchase decision.

The long-term outlook is good considering that the penetration of PVs in India is still very low at around 20 out of 1,000 people. The rise of the young millennial population, increasing disposable income and availability of innovative mobility solutions will drive the market.

While the urban markets are experimenting with various mobility solutions, the rural segment will continue to boost the market as there is a huge aspiration to own a vehicle. The rising disposable income and expanding presence of financial institutions, which expand credit at attractive rates, will enable the ownership of cars. Also, increased government spending for rural infrastructure development and low car penetration in rural areas will result in growth of rural market, said Jain.

The rural market accounted for 17.3 per cent of Hyundai's total sales in 2018-19, and the company expects this figure to touch around 18 per cent.

Original equipment manufacturers are also betting on electric cars. Of the total new launches, six would be in the electric vehicle (EV) space. These include one from Tata, along with the Mahindra e20 NXT, Mahindra eKUV100, Nissan Leaf, MG eZ, Audi e-tron (first luxury SUV at around Rs 1.5 crore) and Jaguar I Pace. 

At present, Tata (Tigor EV), Mahindra (E-Verito and E20 Plus) and Hyundai (Kona) are in the market. The prices start from Rs 8.24 lakh (E20) and go up to Rs 25.30 lakh (Kona).

As battery prices, which account for around 50 per cent of an EV's cost, are coming down by 15 per cent year on year, and, on the other hand, internal combustion engine product prices are going up due to regulatory norms, manufacturers are optimistic that EVs will attract customers. The government has also announced various incentives, including tax deduction and reducing goods and services tax, for EVs to attract customers.

Two-wheelers

Nearly 20 two-wheelers, including one hybrid and two electric products, are expected to hit the roads and they are mostly in the budget and premium categories. Almost seven of these launches would be scooters.

Upcoming launches include the Honda CBR300R, Honda PCX 125, Honda Activa 125 Fi, Bajaj Pulsar 125, KTM 1050 Adventure, Bajaj Pulsar 180NS, Bajaj Urbanite, Hero Hastur, Hero Leap Hybrid SES, Suzuki, TVS Zeppelin and TVS Creon. Of these, TVS Creon and Bajaj Urbanite are electric vehicles.

Devashish Handa, vice-president of sales, marketing and after sales, Suzuki Motorcycle India Pvt Ltd, expects that demand should start reviving before the season sets.

The new government has already set the ball rolling by nudging the industry, regulators and the banking sector. The Reserve Bank of India has already relaxed the monetary policy, and commercial banks have started following its lead. The liquidity issue is being addressed through this, which should give a fillip to growth. 

The level of decline in the industry has also come down from 12 per cent earlier to around seven per cent last month.

"My sense is it should turn the corner in a month or two -- before the season sets in itself. And we should have a much better season than what we had last year," said Handa.

Suzuki has launched the upgraded Gixxer motorcycle and the brand new Gixxer 250. It will also be adding a naked variant in the coming days.

"Despite headwinds, we are hopeful for a revival with decent monsoon and festivals, which drive both urban and rural demand," said a TVS spokesperson.