June passenger vehicle sales up 2.7 per cent

10% decline at Maruti pulls down growth

A double digit decline in sales of the country's largest car maker Maruti Suzuki pulled down the growth of domestic passenger vehicle industry to sub three per cent in June. The industry's sales had grown by six per cent in June last year. The May 2016 growth was also identical. June was mix bag and growth was limited to Hyundai, M&M, Tata Motors, Renault, Ford and Nissan. The surprise element was Toyota with its first double digit growth in more than a year. All these companies have launched one or more new products in last one year.

Maruti, which has a 48 per cent market share, saw its first double digit monthly sales decline in recent history after it lost several days of production due to a disruption in component supply and a six day maintenance shutdown. The company's domestic sales slipped 10.2 per cent.

The company's June domestic sales stood at 92,133 units against 102,626 units in same month last year. All segments of vehicles barring utility vehicles saw a decline. The company's stock price closed at Rs 4,165.80, down 0.46 per cent from previous day while the BSE Sensex gained 0.54 per cent. "The company expects to recover the production loss during the course of the year," Maruti said in a statement.

Second largest player Hyundai clocked growth of 9.7 per cent in domestic sales, as it dispatched 39,806 units to dealerships. Rakesh Srivastava, senior vice president (sales and marketing) at the Korean auto maker credited the growth to pull for models like Grandi10, Elitei20 and Creta. He said a positive environment is building up with good beginning of monsoons and the announcement of 7th Pay Commission salaries for central government employees.

Utility vehicle major M&M grew its June sales by over 7 per cent to 17,070 units. "With the advent of a good monsoon, which we are currently witnessing, we hope to see improved sentiments and buoyancy in demand," said Pravin Shah, president and chief executive (automotive) at M&M. The company's stock price hit a 52-week high of Rs 1,472 at BSE and closed at Rs 1,460.70, up 2.22 per cent from previous day.

Tata Motors' June sales grew by 22 per cent and the company attributed it to 'strong demand' for the recently launched hatchback Tiago. Toyota, which has been badly hit due to December Supreme Court ban on diesel vehicles of 2,000cc in national capital region has reported a steep growth of 29 per cent in June helped by 7,800 units of the recently launched Innova Crysta. N Raja, director and senior vice president (sales and marketing) said production of Crysta has been ramped up and the company can now produce 8,000 units a month.

Renault's growth run on back of Kwid continued. The company posted a 173 per cent growth in June. Ford also doubled its domestic sales to 9,469 units. Problems continued for Honda, Volkswagen and GM. All the three remained in the red. "The shift in consumer preferences led to high stock of diesel vehicles at our dealerships. We have been rationalising wholesale dispatches to correct the stock situation. Our retail sales were much higher than wholesales," said Yoichiro Ueno, president and chief executive officer at Honda Cars India.

Analysts see growth picking up in next couple of months. "June is traditionally a weak month and this June was an exception due to events at Maruti. The growth drivers are in place now and the industry is expected to post good growth August onwards," said Amit Kaushik, country head (India) at Jato Dynamics, a UK based automotive consulting firm.