Auto sales continue to slide in Dec, likely to remain subdued for some time

Automobile sales continued to slip in December despite a faint uptick seen in the two preceding months, worrying the industry that a recovery in the Indian car market is not yet in sight.
Industry executives said sales in the near future might remain subdued, because companies have mostly exhausted their Bharat Stage (BS)-IV stock and will now be selling BS-VI vehicles that are costlier. “With the impending price hikes of 13-15 per cent for BS-VI models coming in from April, demand headwinds should continue in 2020-21 for the two-wheeler segment,” Nomura said in a report.
Retail sales growth has been sliding since August 2019 amid tightening credit, dismal customer sentiment, and lack of clarity in the transition towards BS-VI emission norms.
“2019 has been a challenging year for the Indian automotive industry. Even in such adverse conditions, Hyundai Motor India launched four new benchmark products in different segments as committed. As we gear-up for 2020, we will offer BS-VI in both petrol and diesel engines across different models in our product portfolio,” said Tarun Garg, director of sales, marketing and service, Hyundai Motor India.
With total sales of 133,296 passenger vehicles, the country’s leading carmaker Maruti Suzuki India recorded 2.4 per cent year-on-year rise in car sales during December, as higher demand for compact models such as the new WagonR offset a slump in small cars.
In a regulatory filing, Maruti said it sold 124,375 vehicles in the domestic market in December, compared to 121,479 vehicles sold in the same month a year back. Sales of the firm’s popular models such as the Alto, categorised by the company as ‘mini’ cars, dropped 13.6 per cent to 23,883 units. This was more than offset by a near 28 per cent rise in its ‘compact’ category cars, such as the new WagonR, Swift, Celerio, and Dzire to 65,673.
“We have to carefully watch how the consumer will react, and that’s the reason why we are cautious and not taking a position on whether there will be a change in demand (improvement in sales) in the industry,” Shashank Srivastava, executive director, marketing and sales, Maruti Suzuki India, said a few days back.
Mahindra & Mahindra (M&M) reported a 1 per cent rise in automobile sales in December, as a rise in passenger and utility vehicles offset a dip in commercial vehicle sales. M&M said domestic auto sales came at 37,081 units in December, compared to 36,690 vehicles sold a year back.
Passenger vehicles clocked 4 per cent rise in sales to 15,691, while utility vehicles posted 10 per cent rise to 15,225. Commercial vehicle sales, however, slipped 5 per cent to 16,018, reflecting a slowdown in the economy and rural consumption.
Veejay Ram Nakra, chief of sales and marketing, automotive division, M&M, said, “Our performance in December is according to year-end sales outlook. We are also comfortable with our overall stock levels. We are fully equipped to roll out our BS-VI products and have taken all requisite measures for a smooth transition over the next three months.”
Commercial vehicle sales remained subdued due to a slowdown in economic activity. However, company executives said passenger enquiries are growing as BS-VI transition is coming near.
“Overall sales continued to grow for the second month, with medium and heavy commercial vehicle sales being higher than November 2019 by 15 per cent after posting a 23 per cent growth last month. Enquiries continued to increase, with fleet owners realising the economic benefits of replacing their older vehicles. Increasing enquiries and lower stocks augur well for volumes and realisations, an early indication of which can be seen in December,” said Girish Wagh, president, commercial vehicles business unit, Tata Motors. Auto sales continue to slide in Dec, likely to remain subdued for some time