Sale of passenger vehicles in India registered another steep monthly decline in September, falling by 20.5 per cent over the same month last year as uncertainty over a potential cut in GST rate for cars kept customers away from dealerships for much of the month. Since November 2018, sales have declined in each month, an unprecedented run for the industry.
All the major carmakers saw high double digit decline in September. Maruti Suzuki saw a 27 per cent drop while arch rival Hyundai registered a 14.8 per cent drop. Tata Motors witnessed the heaviest drop at 56 per cent followed by Nissan at 55.6 per cent, Honda at 37 per cent, Ford at 32.5 per cent and Mahindra at 28 per cent. The only company to buck the trend in the month was Renault, which posted a 29 per cent growth but that was on a small base and on the back of an entirely refreshed line up of cars including new Duster, Triber and the new Kwid that was launched on Tuesday.
There are some indications though that the worst of the downturn maybe over. On a sequential basis (month-on-month) compared to August 2019, industry volumes have grown by over 10 per cent. The sales number reported on the first of every month are dispatch data of the vehicles that are delivered from the factories to the dealerships. Typically, sales see an uptick in September as companies build an inventory in anticipation of robust sales during the festive period in October.
"Towards the end of the month, there was an encouraging response in terms of customer footfalls. The customers have responded well to our festive offers as reflected in 11 per cent more retail in September 2019 compared with August. However, the industry continued to decline in September," said Mayank Pareek, President, Passenger Vehicles Business Unit, Tata Motors Ltd. "In September 2019, our retail was 31 per cent more than off-take. As a result, dealer stock came down by around 10 per cent. During the first half of fiscal 2019, network stock has been reduced by 21 per cent, lowest in last 10 quarters. This helped in rotation of dealer working capital and preparing the network for the upcoming festival season. With continued focus on the retail capability enhancement, we have added 82 sales outlet and 3,000 plus sales executives in the system in this fiscal. We are hopeful that the upcoming festival season will bring positive momentum in the market and we are prepared to embrace it."
"We are positive that this festive season, with the onset of Navratra, will augur well for us and the automotive industry. This, in addition to factors such as the good monsoon and recently announced positive government initiatives should help revive the industry in the short term," said Veejay Ram Nakra, Chief of Sales and Marketing, Automotive Division, M&M Ltd.
Two-wheelers also mirrored the trend in passenger vehicles--year-on-year sales declined by 22 per cent in September but grew by 9 per cent over August 2019. Market leader Hero MotoCorp reported a 20 per cent decline in sales over September last year at 612,204 units but it was a 12.7 per cent growth over August 2019. Honda, the second biggest two-wheeler company in India, also posted a 12.4 per cent decline while TVS and Bajaj Auto registered steeper over 30 per cent drop in sales last month over 2018. All the companies however, saw varying degrees of growth over August.
"Growth in the market is driven by first-time buyers, and to attract this segment of customers we have introduced a host of special schemes including low down-payment, aggressive interest rates and easy EMIs. There is also a big segment of customers who are looking to replace their existing two-wheelers, so we have introduced a festive exchange bonus of Rs 3,000 on our Scooter range," said Sanjay Bhan, Head of Sales, After-Sales and Parts, Hero MotoCorp. "We have also introduced offers to support our dealers, like increasing their credit limits, providing support for festive schemes and incentivising their sales teams. We expect a positive festive season and improving trends from here on."
Ominously though, the optimism is more tempered in the commercial vehicle segment that is considered a bigger barometer of the overall economic activity in the country. September was another forgettable month with industry volumes nearly halving at just 35,270 units. The leader of the pack, Tata motors registered a 47 per cent decline at 24,279 units followed by Ashok Leyland, down 45 per cent and Volvo-Eicher down 56.6 per cent.
"With the ongoing subdued demand, we continued our focus on system stock correction by driving retail and aligning production. Retail sales are estimated to be ahead of wholesale by over 16 per cent in September and over 27 per cent in Q2, reducing the overall stock level to the lowest for the last six quarters," said Girish Wagh, President, Commercial Vehicles Business Unit, Tata Motors Ltd. "We are monitoring the impact of the relief package announced by the government, and look forward to improved demand from revival in consumption and spend in infrastructure projects."