Auto sales still on slow track

NEW DELHI: Wholesale dispatches of vehicles across categories continued to plunge in September, as manufacturers feared subdued retail sales amid a slowing economy and an inventory pileup with dealers.

On a sequential basis, though, factory dispatches of passenger vehicles improved, as companies expected sales to increase during the festive month of October.

Maruti Suzuki India Ltd, the country’s largest passenger vehicle manufacturer, witnessed 26.7% year-on-year (y-o-y) drop in dispatches to 112,500 units, while Hyundai Motor India Ltd reported 14.8% fall to 40,705 units, despite a healthy response for its first compact sport utility vehicle (SUV), the Venue, launched in May. Another leading manufacturer, Tata Motors Ltd, reported a massive 56% decline in dispatches to 8,097 units, while Mahindra and Mahindra saw volumes dip by 33% to 14,333 units from the year-ago period. Japanese manufacturer Honda Cars India Ltd reported 37.2% fall in dispatches to 9,301 units.

However, with significant discounts, carmakers expect better festive period sales than last year, considering that both Navaratri and Diwali fall in October. Festival sales make up one-third of total vehicles sales in a fiscal year. Last year’s festive season sales were the worst in five years, in the aftermath of the Infrastructure Leasing and Financial Services bankruptcy, when banks tightened credit disbursal norms, and non-banking financial companies stopped lending due to lack of liquidity.

In July and August, Maruti Suzuki’s factory dispatches fell below the 100,000-unit mark as the company cut production and wholesales to dealers. In September, the company dispatched 112,500 units to dealers. Hyundai also touched the 40,000-unit mark in September after slipping to 38,205 units in August.

According to Rajesh Goel, senior vice president and director, sales and marketing, Honda Cars India, the market was tough in September, but auto sales saw an uptick from August, which was a positive sign. “We hope the consumer sentiment improves during the ongoing festive season, and helps the sales momentum. There are attractive offers available in the market, which make this as the best time for customers to buy new cars,” said Goel.