Car sales slow in July on high base, inventory cut

MUMBAI: Passenger car sales, which had a stellar run since January 2018 on the back of new launches and a recovery in rural demand, saw a slowdown in July because of a high base in the same month last year and a planned inventory reduction by auto makers ahead of the launch of new models and refreshes during the festive season beginning later this month.

A nationwide transporters’ strike in mid-July also impacted production and distribution of vehicles. Auto makers in India consider dispatches to dealerships as sales.

India’s top five carmakers, Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Honda Cars India Ltd, Mahindra and Mahindra Ltd and Tata Motors Ltd, collectively sold 236,947 units during the month, up 1.14% from 233,643 units a year ago.

During July last year, inventory stocking was unusually high as consumers deferred purchases in the preceding months expecting a lower tax outgo post the implementation of the goods and service tax on July 1.

The slowdown in sales this month is an aberration as underlying retail demand, primarily from semi-urban and rural areas, has remained stable as expected, analysts said.

“As auto makers look to fill inventory channels with new products for the festive season in August and September, they did not push inventory aggressively in July,” said Darshini Kansara, deputy manager, industry research at Care Ratings Ltd. “The rural recovery is still positive, as is the broader economy. The recent MSP (minimum support price) hike, near-normal monsoon, and revision in the central government employees’ dearness allowance are positive factors.”

Passenger car market leader Maruti Suzuki reported a marginal fall in domestic car sales (excluding vans and commercial vehicles) to 136,636 units in July from 137,584 units in the same month a year earlier, the first decline since December 2016.

Hyundai Motor India clocked 43,481 units in sales during July, an 1.1% growth over the year-ago period, on the back of refreshed models such as the Creta compact SUV, Verna sedan and Elite i20 hatchback, according to YK Koo, managing director and CEO at the local subsidiary of the South Korean carmaker.

Honda Cars India clocked a 16.9% rise in sales to 19,970 units during July on the back of greater production of the Amaze compact sedan and sustained momentum for the City sedan and WR-V SUV, said Rajesh Goel, senior vice-president and director of sales and marketing at the firm.

Mahindra posted an 5.96% decline in sales to 19,781 units during the month.

A NATIONWIDE TRANSPORTERS’ STRIKE IN MIDJULY ALSO IMPACTED PRODUCTION AND DISTRIBUTION OF VEHICLES