You are here: Home » Companies » News
Business Standard

Carmakers in the slow lane as sales fail to pick up speed in September

Domestic volume dips for the third consecutive month

Ajay Modi  |  New Delhi 

Representative Image
Representative Image

The domestic car-manufacturing industry has seen a decline of 3 per cent in September sales even with the festive season round the corner, indicating an impact of the escalation in fuel prices, among other things.

This happens to be the third consecutive month of decline for the industry.

In August, sales had dipped over 2 per cent owing to floods in Kerala and heavy rain in some other states.

Sales in July had gone down almost 3 per cent owing to a high base effect of last year after the introduction of the goods and services tax. This implies that the industry has not seen growth in the July-September quarter. An increase in insurance expense of new cars owing to the regulation mandating upfront insurance purchase for a minimum of three years also increased cost for buyers.

The data of seven top players shows combined sales of 274,704 units last month, down almost 3 per cent year-on-year (YoY). Most of the reported a decline last month in sales to dealers.

Hyundai and (M&M), the second- and third-biggest players in the domestic passenger vehicle (cars, vans, and utility vehicles) market, reported a decline of 4 and 16 per cent, respectively.

ALSO READ: Global carmakers offer sub-standard, zero-safety cars to India: Report

The biggest player in the segment, Maruti Suzuki, managed to show a small growth rate of 0.7 per cent. The firm, which sells every second car in the country, sold 151,512 units. The firm’s mini segment, under which cars like the Alto and WagonR are sold, reported a decline of 9 per cent to 34,971 units. The compact segment, under which bestsellers like the and are sold, reported below 2 per cent growth at 74,011 units. The stock price of the country’s most valuable automaker hit a 52-week low of Rs 7,211 on the BSE but recovered to end the day at Rs 7,465, up 1.56 per cent.

Korean carmaker Hyundai reported a decline of more than 4 per cent in sales last month. The firm sold 47,781 units last month, compared to 50,028 units in September last year. Vikas Jain, national sales head at the company, said that in spite of some ongoing “market challenges”, the company expected the festive season to induce positive sentiment among customers and help the industry witness strong positive growth.

M&M sold 21,411 units in September, reporting a double-digit decline of 16 per cent in the month when it launched the Marazzo utility vehicle.

“September has been muted for passenger vehicles (PVs) due to factors such as low consumer buying sentiment, high fuel prices, and the effects of the monsoon in many parts of the country. We hope the festive season augurs well for us as well as the automotive industry,” said Rajan Wadhera, president (automotive sector) at M&M. The company’s stock price closed at Rs 847 on the BSE, down 1.52 per cent.

ALSO READ: Honda recalls 1.4 million cars to replace air bag inflators from Takata

Tata Motors continued its growth drive in September. The fourth-largest player saw growth of nearly 7 per cent last month. Mayank Pareek, president of the company’s PV business, said the industry had seen decline in all three months of the second quarter.

“We grew at 7 per cent on the back of continued demand of our new-generation vehicles. We expect sales to pick up this festive season,” he added. Tata Motors’ stock price closed the day in the green with an increase of 2.60 per cent.

Japanese carmaker Honda reported a decline of 19 per cent in sales. Rajesh Goel, senior vice-president and director (sales and marketing), said “subdued” market sentiment, combined with a higher base of last September and the onset of the Shradh period in Northern India from last week, resulted in lower sales.

“In order to keep the dealer stock aligned with our norms, we rationalised the wholesale dispatches in September. We expect the festival period improves market sentiment and results in positive sales,” he added.

Toyota managed to remain in the growth lane with a volume of 12,512 units, up over 1 per cent, compared to last September.

Ford sold 8,239 units, with a 6 per cent decline YoY.

Carmakers in the slow lane as sales clock 3% decline in September

First Published: Tue, October 02 2018. 05:34 IST