February likely to see low passenger vehicle sales

The performance of Maruti Suzuki, the largest player, is also likely to be flat

After sluggish growth in the first month of this calendar year, the passenger vehicle (PV) sector seems headed the same way this month. The sales figures would be announced on Tuesday.

The biggest dampener would come from the negative to flat growth in domestic sales from Maruti Suzuki, the country's largest, with 46 per cent market share.

Companies also faced challenges in distributing vehicles to some northern states, including Haryana, for five-odd days due to the Jat agitation. Maruti Suzuki, which has the capacity to produce 5,000 vehicles daily across its two factories in Haryana, had to stop operations for two days this month. With disruption in component supplies caused by the Jat agitation, it lost output of at least 10,000 units. Production resumed on Tuesday afternoon but it did not operate at full capacity for a day or two.

LACKLUSTRE PERFORMANCE

• Passenger vehicle sales may see flat or single-digit growth in Feb
   
• The performance of Maruti, the largest player, is also likely to be flat
   
• Jat agitation caused output loss of 10,000 units at Maruti plants in Haryana
   
• Most companies faced distribution challenges in North India due to the Jat stir
   
• Sales grew by 0.6 % in Jan
   
• April-Dec growth of 9%, moderated to 8.13% in April-Jan

A spokesperson said the company was trying to post at least a flat growth in domestic sales this month. In February 2015, the company had growth of about eight per cent. With average industry sales of 225,000-230,000 units a month, Maruti's loss of 10,000 units is about four per cent of this. The ban imposed by the Supreme Court in mid-December on sales of diesel vehicles with engine capacity of 2,000cc and above in this city and the surrounding region is also impacting volumes for some others. Toyota, for instance, expected to show a decline in February. In general, this has impacted demand for most diesel vehicles. The ban is in place till March 31.

Industry watchers said Tata Motors, Volkswagen and General Motors might also see flat growth or a decline in February.

PV sales have, however, grown by double digits or a high single digit in most months of the current financial year (ending March 31). Growth in January slowed to 0.6 per cent, with low growth of 0.8 per cent by Maruti Suzuki being a primary reason. The company said there were fewer working days in the month, due to holidays.

Hyundai, the second largest, is confident of growth. "In spite of logistic challenges for transportation of vehicles to North India and loss of many business days of dealership operations across Haryana in the second half of the month, we are hopeful of a high single digit sales growth, on the strength of demand for the Creta, Elite i20 and Grand i10," said Rakesh Srivastava, senior vice-president (sales and marketing).

Abdul Majeed, a partner at Price Waterhouse and a sector expert, said January-February is a period of low demand for PVs. "This year, an additional factor behind the trend is the Haryana Jat agitation." Two months of low growth towards close of the financial year is likely to impact the segment's annual growth in FY16. Growth in April-January had already moderated to 8.1 per cent, against the nine per cent of the April-December period of the earlier year.