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

The Economic Times - - Brands: Creating Desire - Our Bu­reaus Wri­tankar.Mukher­jee

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.

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