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Slowdown Blues: Car sales crash 29% in August; all eyes on Sep 20 GST meet

Sumant Banerji     September 1, 2019

Automobile sales in the country crashed again by nearly a third in August 2019 over last year marking the 10th straight month that sales have declined.

India's largest carmaker Maruti Suzuki posted a steep 36 per cent decline in sales in August at 93,173 units compared to 145,895 units in the same month last year. This was the second month in a row that Maruti has dispatched less than 100,000 cars to dealerships.

Others including Hyundai Motor India and Mahindra and Mahindra performed no better despite multiple new launches in the last 12 months for cushion. Hyundai brought back the Santro in a new avatar in October last year, followed it up with its maiden compact SUV Venue in May this year and launched the third-generation version of its bestselling hatchback Grand i10 Nios last month. Still, it registered a 16.6 per cent decline in sales last month. Mahindra which launched the Marazzo MPV, Alturas premium SUV and XUV3OO Compact SUV also posted a 31.6 per cent dip in sales.

"The auto industry continues to be subdued in August due to several external factors. We are optimistic and hopeful of a good festive season going ahead," M&M Chief of Sales and Marketing, Automotive Division Veejay Ram Nakra said.

Those without the luxury of new products fared worse. Honda Cars saw its sales slide by 51.3 per cent while Toyota witnessed a 24.1 per cent dip. Homegrown Tata Motors saw sales decline a staggering 58 per cent though the company said its dealers actually sold more cars to customers directly and the lower numbers were largely due to inventory correction.

Also Read: Slowdown Blues: Mahindra and Mahindra's sales fall 25% to 36,085 units in August

"Under the challenging market situation, we continued to focus on improving retail sales. Our retail sales were 42 per cent more than offtake and so network stock came down by over 3,000 vehicles. This prepares dealers well for the festival season," said Mayank Pareek, President, Passenger Vehicles Business Unit, Tata Motors Ltd.

"Our focus remains on the working capital rotation of the channel. Our aim is to improve the retail capability, till August 2019, 72 new sales outlets were added and 3500+ sales executives were recruited. Marking the onset of the festive season, we will drive positive sentiments with special offers and several special editions. We are hopeful that recently announced financial package by finance minister will help in improving the liquidity of market and to reduce the ownership cost. This will certainly help the industry to revive and drive the growth."

"The auto sector continues to witness high de-growth due to poor consumer sentiment. This is despite the high discounts in the market which makes it the best time to buy cars," said Rajesh Goel, Senior Vice President and Director-Sales and Marketing, Honda Cars India Ltd. "We hope the recent measures taken by the government will help in improving consumer sentiment and demand creation as we move forward. With the impending festive season, sales are likely to pick-up in coming months."

Also Read: Slowdown Blues: India's passenger vehicles sales drop 31% in July; record 9th straight dip

The domestic industry is in the midst of its worst slowdown ever as on a year-on-year basis, sales have declined in 13 of the last 14 months. The last time sales had grown was in October last year. What is worse, the quantum of decline has only increased in the last few months indicating that the worst may still not be over yet.

In April, May, June and July this year, passenger vehicle sales in the country declined by 17.07, 20.55, 17.54 and 31 per cent respectively. The cumulative sales of the top 6 carmakers in the country that were declared on Sunday, showed a decline of over 29 per cent in August 2019 over 2018.

Also Read: Slowdown blues: Maruti Suzuki reports 33% drop in August sales at 1,06,413 units

"Consumer sentiment continues to be muted in August, with customers deferring the purchase of vehicles. Severe floods have also hurt the demand in the industry. Unfavorable exchange rate is not helping our cost," said N. Raja, Deputy Managing Director, Toyota Kirloskar Motor.

Finance Minister Nirmala Sitharaman had on August 23 announced a few measures including 30 per cent depreciation for new vehicles and revoking the ban on purchasing vehicles for the government, to spur a turnaround but many in the industry felt the measures were too little too late. The industry has been seeking a reduction in GST rate on cars from 28 to 18 per cent and with sales continuing to fall at an alarming rate, all eyes would be on whether any reduction would be forthcoming at the next GST Council meeting on September 20 in Goa.

Also Read: Slowdown Blues: Auto companies in India cut more jobs, halt production to tackle slump

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