Auto sales pick up in July as dealers build stocks

ADDING UP Festive season likely to push up sales further, according to analysts

Car and two-wheeler sales advanced at a brisk pace in July as manufacturers dispatched more vehicle to their dealers to build stocks after the goods and services tax (GST) came into force on July 1.

Car market leader Maruti Suzuki India Ltd’s domestic sales rose 22.4% to 154,001 units in the month from a year ago, the company said on Tuesday.

A 25.3% increase in sales of compact models including the Swift, Ritz and Baleno led the sales growth. Driven by the popularity of the Brezza, sales of utility vehicle rose 48.3% to 25,781 units in July.

Indian car- and two-wheeler makers count dispatches to dealers as sales. Sales to end-consumers, which are not tracked by companies or the industry lobby group Society of Indian Automobile Manufacturers (SIAM), may have actually slowed, according to an official at the Federation of Automobile Dealers Association (FADA), a grouping of dealers. This person, who asked not to be identified, said buyers put purchases on hold because dealers cut back on discounts they had offered in May and June to push sales ahead of the move to GST.

The first few weeks after the July 1 launch of GST saw almost no sales, a dealer in high-end cars said on condition of anonymity.

Still, companies and dealers are building up stocks ahead of the festive season — the period beginning September and ending December that many Indians consider auspicious for purchases of consumer durables including cars and bikes.

“We expect strong demand for automobiles with the normal monsoon this year and expectations of another rate cut (by the Reserve Bank of India),” said Shrikant Akolkar, an analyst at Angel Broking Ltd.