Car sales buck fall­ing trend, rise 1.55% in Oct

Business Standard - - COMPANIES - SHALLY SETH MOHILE

Snap­ping a three-month de­cline, pas­sen­ger ve­hi­cle (PV) sales in­creased marginally in Oc­to­ber over a year-ago pe­riod as high base ef­fect of the last year faded, said So­ci­ety of In­dian Au­to­mo­bile Man­u­fac­tur­ers (Siam) on Fri­day. How­ever, a dull fes­tive sea­son, which ended with Di­wali on Wed­nes­day, in­di­cates that the go­ing may not be easy in the months ahead.

Au­tomak­ers dis­patched 284,000 units of PVs in Oc­to­ber against 279,000 units, up 1.55 per cent over a year ago. Most of the other seg­ments such as com­mer­cial ve­hi­cles, two-wheel­ers, and three-wheel­ers re­ported a high dou­ble-digit growth dur­ing the month. Auto firms in In­dia count despatches to deal­ers as sales. Cars sales re­mained al­most flat, in­creas­ing to 187,000 units from 185,000 last year.

“We are happy that PV sales have come in the pos­i­tive ter­rain af­ter three months,” said Vishnu Mathur, di­rec­tor gen­eral at Siam. The sales in the months ahead, how­ever, will be gov­erned by a host of fac­tors such as liq­uid­ity sit­u­a­tion at fi­nanciers, fuel prices, and in­ter­est rates, which have im­pacted sales in the re­cent past, he said.

The re­tail sales or sales to cus­tomers, which are not re­ported by man­u­fac­tur­ers in In­dia, how­ever, show not all is hunky-dory for auto sales in the world's fastest-grow­ing mar­ket. A muted Navra­tra, Dusse­hera, and Di­wali, which ac­count for 20 per cent of an­nual sales for PVs and a third for twowheel­ers, have led to stock-pil­ing at deal­er­ships across man­u­fac­tur­ers, said a spokesper­son at Fed­er­a­tion of Auto Deal­ers’ As­so­ci­a­tion (FADA).

With the ex­cep­tion of com­mer­cial ve­hi­cles, sales have been lower than the last year's fes­tive sea­son, said Sa­harsh Dam­nani, chief ex­ec­u­tive at FADA, adding two-wheel­ers have been worst hit. While two-wheeler sales are down 15 per cent year-on-year, PVs sales are lower by 5-7 per cent.

The pre-fes­tive sea­son in­ven­tory for two-wheel­ers and PVs was 60 days and 45 days, re­spec­tively. At the end of all the fes­ti­vals, it stands at 50 days for two-wheel­ers, and 35-40 days for PVs, which is unusu­ally high, said Damani.

“The high in­ven­tory lev­els will put lot of pres­sure on deal­ers and man­u­fac­tur­ers as the year draws to a close,” he said, point­ing out that it would force them to of­fer high dis­counts to make way for new cal­en­dar year mod­els.

PV sales skid­ded 3.6 per cent in the quar­ter ended Septem­ber 30, over the cor­re­spond­ing quar­ter a year ago. Sales had got a boost in the year-ago quar­ter, fol­low­ing the im­ple­men­ta­tion of goods and ser­vices tax. The im­pact was nor­malised in the fol­low­ing month.

Mean­while, driven by the mo­tor­cy­cles, which ad­vanced 20.14 per cent over last year, to­tal two-wheeler sales were up 17.23 per cent in Oc­to­ber to 2.53 mil­lion units a year ago.

Scoot­ers, too, re­ported a 12 per cent in­crease 643,000 com­pared to last year. Sales of trucks and buses also jumped 24.82 per cent to 87,147 units dur­ing the month com­pared with the last year. Cu­mu­la­tively, ve­hi­cle sales across cat­e­gories reg­is­tered a growth of 15.33 per cent to 2.4 mil­lion units, it added.

“It has been a fairly tepid per­for­mance by pas­sen­ger ve­hi­cles. Within this seg­ment, util­ity ve­hi­cles have shown a lit­tle more in­ter­est. It ap­pears that the in­ter­est rates, fuel prices and in­sur­ance cost have been the cause. How­ever, the vol­umes are still at a de­cent level and if it con­tin­ues at the same level the next 5 months, it will end up with a high sin­gle digit growth,” said Srid­har V, Part­ner Grant Thorn­ton In­dia.

Mo­tor cy­cles and com­mer­cial ve­hi­cles have been the bright spots and help­ing main­tain a healthy level of growth for the auto sec­tor, he said.

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