Auto Cos Celebrate Wholesale
Vehicle makers posted record sales growth as dealers picked up stock in large numbers ahead of the festive season. The going wasn’t so smooth for appliance makers, which saw sales fall sharply in July Wholesale volume grew 13-14% last month; Maruti posts
New Delhi | Mumbai: Passenger vehicle sales are estimated to have registered record growth in July with manufacturers resuming supplies to dealerships and stocking up ahead of the festive season, which is set to commence later this month.
Initial estimates suggest wholesale volume last month rose in healthy double digits of 13-14% and may have inched ahead of March 2012 peak of 2,95,403 units to approximately a little over 2,96,000 units, ahead by 500-800 units. Automakers in India report wholesale volumes — despatches to dealers — and not retail numbers sold to customers. To be sure, while it was a bumper wholesale performance, retail sales tailed off in July due to pre-buying ahead of the goods and services tax (GST) rollout at the start of last month.
Industry volumes were buoyed by Maruti Suzuki, which reported its highest-ever monthly sales of 153,298 units, which is almost 10-15% of its average monthly sales in recent times. Wholesale volume grew 21.9% in July from 125,764 units in the year earlier. Suzuki’s Japanese rival Toyota too had a record July with growth of 43% to 2,000 units. Mahindra & Mahindra and Honda Cars India that had seen sales slow to the low single digits, registered a healthy expansion of 21% and 22%, respectively, in July. New model launches at Tata Motors continued to drive volumes at the company, with despatches growing10% in July to 17,750 units..
“The focus in July has been on wholesale as we had corrected inventory during the transition to GST,” RS Kalsi, executive director, marketing and sales, told ET recently. “Retail sales were affected last month but there are a lot of positives. The monsoons have been good (and) vehicle prices have come down after GST. We are optimistic of the next two quarters.”
Maruti Suzuki sales rose across segments. Sales of mini cars Alto and WagonR grew 20.7% to 42,310 units, while those of compacts (Swift, Celerio, Ignis, Baleno and DZire) rose 25.3% to 63,116 units. Sales of midsize sedan Ciaz rose 23.5% to 6,377 units. Demand remained strong for utility vehicles — Ertiga, SCross, Vitara Brezza — and grew 48.3% to 25,781 units. In the commercial vehicle segment, the company clocked sales of 703 units of the Super Carry.
However, Hyundai Motor India saw sales go up by just 4.4% to 43,007 units. “There are some uncertainties in the market as small businessmen and traders are assessing the impact of GST on their operations. Retail sales have been slow in July,” said Rakesh Srivastava, director, marketing and sales.
Experts said sales had been expected to fluctuate in the last six months due to one-off events such as transition from BS III to the BS IV emission standard and the implementation of GST. With all major events out of the way, industry is looking forward to a bumper festive season. “Over the next couple of years, growth in the auto industry should double to around 15% due to the implementation of GST,” Srivastava said. Ford India managing director Anurag Mehrotra said: “We believe a good monsoon, conducive financing rates and consumer confidence during festival season will provide a good impetus for the industry.” At Ford, volume rose 19% to 8,418 units. At the showroom end, however, offtake declined significantly in July, senior industry executives told ET. Deliveries to customers in July fell 30-50% depending on the manufacturer and the state. Wholesale volume rose in contrast as most dealerships had liquidated stock before the introduction of GST. Companies had a bumper July on the two-wheeler front too. For market leader Hero MotoCorp, it was a third consecutive month of 600,000-plus unit sales. The maker of the Splendor and Passion bikes posted17% growth to 623,000 units. Honda Motorcycle & Scooters India, saw a growth of 20% to 544,000 units including exports, with the company gaining 2-3% market share in a month. Two Wheelers Suzuki Motorcycle 17-Jul Growth (%) Passenger Vehicles Hyundai Motor M&M Honda Cars India Tata Motors Ford India Renault India* Nissan Motor India* General Motors* Volkswagen India Kolkata: Primary sales of refrigerators, washing machines and televisions from companies to distributors and retailers took a beating in July, dipping by up to 25% over the same month last year as it took manufacturers and large trade partners almost 10 days to make their billing systems compliant with goods and services tax (GST). The industry was left with no inventory until then as companies halted production toward June-end for the transition.
This was in stark contrast to the widespread expectation that primary sales of white goods will pick up significantly in July since retailers had stopped buying from endMay to clear out old stock and had run discounts throughout June whereby the trade almost exhausted inventory. The Diwali-like sale in June expectedly led to 40-45% drop in retail sales in July, three senior industry executives said.
“July in itself is a dull month for the industry. While we did expect brisk primary sales, the GST transition took time to be settled, which led to 20-25% dip in primary sales. Production too resumed after the system became GST compliant. The sales situation, however, is improving week by week,” said Videocon chief operating officer, CM Singh. 17-Jul Growth (%)
Godrej Appliances business head Kamal Nandi said there were challenges in both purchase and supplies whereby almost 10 days were lost in July when there was no business at all. “And then it took time for products to reach branches and billing. While the transition to GST has been good, there has been caution at both our end and trade whether we are complying fully with the law. This caution is not allowing to ramp up primary sales immediately,” he said.
While around 30-35% of total white goods sales is from national, regional and local retail chains, the balance is still led by distributors supplying to neighbourhood dealers and small shops across the country. The large chains managed the transition faster while the companies are still hand-holding the small dealers in the transition to the GST system.
In fact, a senior executive with a leading white goods maker said that it was forced to undertake backdated valueadded tax (VAT) billing in July to some small dealers since they were not ready for GST. GST billing for all partners will start from August.
Industry expects the early festive season this year will ramp up primary sales in August. Panasonic India head for sales and services, Ajay Seth, said July was slow, particularly in the North-East, which is a distributionbased market where the infrastructure was not GST-ready.