India Auto Inc faces major sales slump in November

by Mayank Dhingra 03 Dec 2018

With retail sales remaining slow even in the auspicious month of Diwali, the passenger vehicle industry has reported weak wholesales, pointing at a tough business environment replete with negative buyer sentiment.

As the ongoing calendar inches closer to the year end, sales in the passenger vehicle (PV) segment continue to dwindle, with even the festive season turning out to be a slow one for the industry, which is overlooking a dampened fiscal year of low single-digit growth by March 2019.

High fuel prices, which have been on the boil over the last couple of months, coupled with hefty insurance premiums due to the five-year compulsory bundling upfront at the time of purchase, are the two key reasons to be seeding the negative sentiment, curtailing consumers from putting down their money into new cars.

Maruti Suzuki
While industry bellwether, Maruti Suzuki posted declining sales of 143,890 units in the month (November 2017: 144,297), with a de-growth of 0.3 percent, the slowdown is enough to extrapolate the scenario to the entire industry, which could also be seen following a downward trend and experiencing a rough patch.

While the entry-level Alto and Wagon R are substantially down 21.6 percent with sales of 29,954 units (November 2017: 38,204), the quintet of the Swift, Celerio, Ignis, Baleno and Dzire saved the blushes the company with sales of 72,533 units, albeit posting marginal growth of 10.8 percent (November 2017: 65,447).

Both the new Swift and the Baleno recently notched milestones of their own. On November 27, the Swift crossed the two million sales landmark in the domestic market, 13 years since the car’s launch in May 2005. Two days later, on November 29, Maruti Suzuki announced that the Baleno had zipped past the 500,000 sales milestone in India in 38 months since launch

Honda Cars India
The Japanese carmaker saw overall sales of 13,006 units, registering respectable growth of 10 percent with sales in November 2017 closing at 11,819 units. According to Rajesh Goel, SVP and director, Sales and Marketing, Honda Cars India, said, “While the overall auto industry’s growth has remained muted, HCIL could register 10 percent growth last month. This is largely due to Diwali which happened in November this year as compared to being in October last year along with continued good performance of all-new Amaze and robust sales of models like City and WR-V. Our consumer offers were also very attractive.”

The company has seen its Amaze compact sedan crossing 50,000 units within six months of launch, earlier in May this year.

Mahindra & Mahindra
The homegrown UV specialist, on the other hand, saw sales remaining absolutely flat in the month with overall wholesale volumes of 16,188 units, as against 16,030 units sold in November last year. While its UVs remained flat too with 15,049 going home to buyers (November 2017: 14,958), passenger cars grew 6 percent to 1,139 units (November 2017: 1,072).

Commenting on the monthly performance, Rajan Wadhera, president, Automotive Sector, M&M, said, “We have registered a double-digit growth in our overall sales. However, adverse macro-economic conditions have impacted the growth forecast for the automotive industry in general. Going forward, we hope that decrease in fuel prices and improving liquidity will drive demand for passenger vehicles. At Mahindra, we remain upbeat due to our new product launches of Marazzo, Alturas G4 and the upcoming launch of our new SUV codenamed S201.”

Tata Motors
The company which is otherwise seen doing well amongst its peers, even in times of slowing sales, also felt the pressure in November. The carmaker’s sales swere down 1 percent year-on-year (YoY), with overall sales of 16,982 units (November 2017: 17,157) in the month. While the Nexon and Tiago hatchback have been the main growth drivers for the company over the last one year, it is perhaps sitting at the edge, overlooking the launch of what could be its most important product in the SUV segment in a long time, with the Tata Harrier set to be introduced in early 2019.

Toyota Kirloskar Motor
The Japanese giant witnessed a major setback in November, with total sales down 15.8 percent at 10,721 units, when it had sold 12,734 units in November 2017. While its Yaris sedan has failed to make a dent in the C-segment space, the two breadwinners remain the Innova Crysta MPV and the Fortuner SUV, both of which have strong brand value in the Indian market.

According to N Raja, Deputy Managing Director, Toyota Kirloskar Motor said, “Fluctuating exchange rates, rising fuel costs and high interest rates have impacted the consumer sentiment in the auto industry.  Consumer demand has witnessed a downward trend over the festive period as compared to same period last year. We are trying to maintain lean inventory at the dealership to avoid stock pile-up. The festive season has not been able to usual spur in customer demand.” 

While liquidity in the retail space remains low, the rather stuffed dealer stockyards due to a weak festive season also add up to cause a slump in wholesales in November. Only the start of the new calendar could now bring some light to the industry, which, otherwise has been hit hard by these external factors, and remains hopeful of coming out of the trying times with a slew of new models and new players set to enter the market in 2019.

Also read: FADA voices concern about industry de-growth in festive season

Top 10 Passenger Vehicles – October 2018

Tata, Toyota, Maruti and Ford grow PV market share between April-October


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