Business Standard

Auto retail sales likely to improve in festive season: Ind-Ra


Automobile retail sales are likely to pick up with an improvement in consumer sentiment during the ongoing festive season due to recent liquidity easing measures announced by the government and on back of favourable monsoons, according to India Ratings and Research (Ind-Ra).
Consequently, inventory build-up at the dealer level in anticipation of increased demand during this period is likely to lead to increased wholesale billing by original equipment manufacturers (OEMs) during October, it said.
"However, with existing high dealer inventory levels, production cuts by OEMs are likely to continue in the near-term," said Ind-Ra in the credit news digest on India's auto sector.
The report highlights trends in sub-segments of auto sector including passenger vehicles (PVs), commercial vehicles (CVs) and two-wheelers (2Ws) with a focus on sales volumes growth, market share movement, change in commodity prices and recent rating actions.
Domestic automobile industry's sales continued their downward trend in September with a 22 per cent year-on-year decline on weak consumer sentiments owing to the slowing economy. Inventory at dealer level remained high, leading to most OEMs continuing to implement production cuts.
Over April to September, overall auto industry undertook a production cut of 13 per cent year-on-year with 16 per cent, 27 per cent and 13 per cent production cuts in PV, CV and 2W segments respectively.
In the PV segment, market leader Maruti Suzuki India took a production cut of about 21 per cent. The average inventory for PVs increased marginally in September to 30 to 35 days from 25 to 30 days in August.
The average inventory for CVs decreased marginally in September to 50 to 55 days from 55 to 60 days in August. But the average inventory for 2W remained high at 60 to 65 days.
PV sales volume declined 24 per cent on account of a 33 per cent drop in the sales volume of cars. Cars sales volume continue to decline on weak consumer sentiments amid a slowdown in urban and rural household consumption, a rise in the cost of ownership and the growing preference of shared mobility over buying a car.
CV sales volume declined 39 per cent in September owing to decreased industry demand on account of tight liquidity conditions amid slowed economic activity. 2W sales fell 22 per cent on weak rural and semi-urban demand.
In the PV segment, Maruti's market share dropped by around 3 per cent to 49 per cent in September on lower sales volumes, while Hyundai Motor India gained 2 per cent market share. Tata Motors Ltd's CV market share dropped by around 5 per cent to 41 per cent while Mahindra & Mahindra Ltd gained 8 per cent market share.
2W market leader Hero MotoCorp Ltd's market share increased by around 1 per cent to 36% in September, said Ind-Ra in the news digest.

Disclaimer: No Business Standard Journalist was involved in creation of this content

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Oct 28 2019 | 12:15 PM IST

Explore News