BackPossibility of below-normal monsoon dampens car sales
Sales advance at Honda, Tata Motors, Hyundai, Maruti, while Mahindra and Toyota report a decline
Premium
Mumbai: Car sales showed signs of weakening in June after zipping ahead month on month since May last year, according to monthly sales data released by a handful of auto makers on Wednesday.
Executives at car firms attributed it to buying sentiment being undermined by the possibility of below-normal monsoon.
Domestic sales at Maruti Suzuki India Ltd rose 1.8% in June to 102,626 units, compared with a year ago. The volumes at India’s largest carmaker were dragged down by a 27.39% decline in sales of the mini segment that comprises the WagonR and Alto, among other models. Volumes of the company’s compact car models, including Swift, Ritz and Celerio, however, advanced 24.4% to 45,701 units, compared with the year-ago month.
An analyst at a domestic brokerage who declined to be identified said the company’s volumes last year were fuelled by the anticipation of a discontinuation of excise duty, which made buyers advance purchases. With no such trigger this year, despatches have dropped.
Car makers in India report despatches to dealers and not sales to customers.
A below-normal monsoon will further hurt the already distressed rural economy, rating agency Moody’s Investors Service said on Tuesday. “A weak monsoon will hurt India’s agricultural output, which 68% of rural Indian households rely on as their primary source of income," the agency said.
“It’s a worrisome trend," said Mayank Pareek, president, passenger car business unit, Tata Motors Ltd, on the patchy sales trend in the car market since April.
After a dull April, sales tend to advance at a brisk pace from May. However, this year, the trend is the opposite, he said, referring to June sales, which he estimates to be around 216,884 units, against 216,698 units in 2014.
“From the high of 16% in April, it’s down to zero growth in June," said Pareek. “Perhaps it’s to do with the perceived fear of a bad monsoon and hope of an interest rate cut which leads to postponement of buying," he added.
Led by new models such as Zest, Bolt and the next-generation Nano and a low base, passenger car sales at Tata Motors continued on its upward trajectory. Sales advanced 30% over a year ago to 10,281 units. The company’s utility vehicles saw a 11% drop to 1,765 units.
Sales at the local arm of Hyundai Motor Co. went up 8.3% to 36,300 units. “In a market bearing low traction, consistent demand of Elite i20, Grand i10, Xcent saw Hyundai’s volume grow 8.3%. With the upcoming launch of global sport utility vehicle (SUV) Creta, we are confident of sustained growth," said Rakesh Srivastava, senior vice-president, sales and marketing, Hyundai.
Honda Cars India Ltd, too, saw volumes advance 13% to 18,380 units. The carmaker plans to launch the new Jazz this month.
Sales continued to skid at Mahindra and Mahindra Ltd. The maker of Scorpio and XUV 500 saw volumes contract 15% to 15,880 units during the month compared to last year.
Pravin Shah, president, automotive sector, at the Mumbai-based firm, said new model launches and the prospects of a good monsoon will help the firm recoup volumes. Mahindra plans to launch its maiden compact SUV later this month.
Domestic sales at Toyota Kirloskar Motor Pvt. Ltd dropped 12.8%, or 10,464 units, over a year ago. The firm attributed it “to a production loss of six days due to a plant shutdown".
As for two-wheelers, high unsold stocks at dealerships forced manufacturers to cut down despatches, resulting in tepid sales.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
