PV sales down 7.6%, vehicle despatches fall 19.8%

Passenger vehicle sales fell 7.61 per cent to 1,56,285 units in February and total automobile sales tanked 19 per cent to 16.46 lakh units, with the economic slowdown hitting demand hard and buyers shying away from purchases.

Wholesale dispatches in India from factory gates to dealers, which are counted as sales, were also affected by the lower production in view of transition to BS-VI emission norms that kick in from April 1.

"The decline in wholesale dispatches is primarily due to economic slowdown and lower production of BS-IV vehicles," Rajan Wadhera, president at Siam, said.

Some upside on the registration numbers of Vahan, the national register for sales of vehicles, can be attributed to last-minute purchase by customers trying to advance purchase of BS-IV vehicles, he pointed out.

Production is also affected in February due to the lack of availability of spare parts supplied from China, Wadhera said.

He said supply chain disruptions may impact the production plans for companies going forward while welcoming the government's step to issue a "notification of force majeure for coronavirus and 24×7 clearance of shipments at all customs formations".

The finance ministry on Feb 19 classified the coronavirus outbreak as a natural calamity, and covered it by the force majeure clause (FMC). The ministry has said this clause can free both the parties in a contract from contractual liability in fulfilling their obligations. However, the ministry has clarified that there may be a force majeure situation affecting the purchase organisation only.

Suman Chowdhury, president at Acuité Ratings & Research, said the sharp decline in year-on-year production of both commercial vehicles and passenger vehicles at 40.1 per cent and 9.4 per cent respectively in February reflects not only the expectations of weak demand in the near term but also the challenges in the supply chain for BS-VI vehicles brought about by the outbreak of the Corona virus.

"If the supply chain disruption gets extended, there can be a significant impact on domestic sales of BS-VI vehicles in the first quarter of FY21," he pointed out.

The marginal improvement in industrial production as evident from the IIP figures of January 2020 is clearly yet to be seen in commercial vehicle demand since the latter sales have dropped by 32.9 per cent on a year-on-year basis.

"What is however, encouraging is the healthy growth in exports in both the passenger vehicles and the two-wheelers at 8.9 per cent and 15.6 per cent respectively despite the weak global economic environment," Chowdhury said.

Passenger vehicle sales at market leader Maruti Suzuki declined 2.34 per cent last month at 1,33,702 units. Rival Hyundai Motor India also reported 7.19 per cent drop at 40,010 units, while new entrant Kia Motors took the third position during the month selling a total of 15,644 units.

Total two-wheeler sales in February fell 19.82 per cent to 12,94,791 units as compared to 16,14,941 units in the same month last year, Siam said.

Market leader Hero Moto Corp reported total twowheeler sales of 4,80,196 units last month, down 20.05 per cent. Rival Honda Motorcycle & Scooter India also saw a decline of 22.83 per cent at 3,15,285 units last month.

Similarly, TVS Motor Co also suffered a drop of 26.73 per cent at 1,69,684 units last month.

Overall motorcycle sales last month declined 22.02 per cent at 8,16,679 units as against 10,47,356 units in the year-ago period. Scooter sales were down 14.27 per cent at 4,22,310 units last month as compared to 4,92,584 units in February last year.

Sales of commercial vehicles were down 32.9 per cent to 58,670 units in February as against 87,436 units in the same month last year, the Siam data showed.