KERALA FLOOD: CAR SALES FALL IN AUGUST
MUMBAI: Passenger car sales by India’s top car makers fell in August in the first monthly sales drop in more than a year amid devastating floods in Kerala and the high base of the previous year, company figures released on Saturday showed.
The top five carmakers, Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Mahindra and Mahindra Ltd, Tata Motors Ltd and Honda Cars India Ltd, together sold 216,211 vehicles, down almost 1% from 218,188 a year ago. Automakers in India count factory dispatches to dealerships as sales.
While car sales have grown at a healthy pace since November 2017 on new launches and a rural demand recovery, they have shown a downtrend for the second straight month.
Sales growth moderated in July to 1% y-o-y due to a high base and planned inventory reduction.
Car sales last declined in June 2017 when customers held back purchases to benefit from lower rates under the goods and services tax regime that debuted on 1 July.
The high base of August 2017 was due to the early onset of festive season and buildup of inventory, said Hetal Gandhi, director at Crisil Research. This year, floods in Kerala hit demand during Onam festival, she said.
Despite introducing a facelift of its mid-sized sedan Ciaz, market leader Maruti Suzuki posted a second straight monthly decline in local car sales (excluding vans and commercial vehicles).
Sales fell 3.7% to 132,232 units in August from 137,339 units a year earlier. Maruti’s sales were down 0.69% in July, the first time since December 2016.
“Sales during the month were adversely affected due to severe floods in Kerala and heavy rains in other parts of the country,” Maruti said. Kerala contributes about 8% of Maruti’s sales.
Sales of compact cars, which comprise bulk of Maruti’s sales, fell 3.6% on-year to 71,364 units in August. With the exception of July, this segment has recorded more than 20% growth since January on strong demand for the new Swift hatchback and Dzire compact sedan, as well as the Baleno premium hatchback.
While sales of entry-level Alto and WagonR grew marginally to 35,895 units, the sport-utility vehicle segment comprising Vitara Brezza and S-Cross models posted a 16% drop to 17,971 units. Sales of the Ciaz grew 8.4% to 7,002 units in August.
The unfavourable external environment also hit Hyundai as the local unit of the South Korean car maker posted a 2.8% drop in domestic sales to 45,801 units.
Managing director and chief executive YK Koo is, however, confident of clocking about 9% growth in the festive season, spurred with the upcoming launch of a “family car” codenamed AH2, as well as continued demand for the Creta compact SUV, Verna sedan and Elite i20 hatchback, he said in an emailed response to Mint queries.
Koo termed Kerala “an extremely important market” accounting for about 6% of Hyundai India’s sales. He expects sales in the state to rebound from January.
Mahindra and Mahindra, maker of the Bolero and Scorpio SUVs, posted a 1.8% rise in sales to 19,758 vehicles in August. Rajan Wadhera, president of the company’s auto unit, said the domestic industry “remained subdued in August with low sentiments” due to external factors. He expects Mahindra’s sales to pick up due to the festive season and the introduction on Monday of its Marazzo multi-purpose vehicle.
Gandhi of Crisil expects inventory buildup and sales to take place in September for the upcoming festive season in October and November with an FY19 growth forecast pegged at 9-11% for passenger vehicles.
Factors such as a rise in rural and urban disposable incomes, driven by broader economic growth, and the implementation of the Seventh Pay Commission, would contribute to the “healthy” growth in car and two-wheeler sales, India Ratings and Research said in a August 31 note.