Car sales fall in August on Kerala floods, high base
SPEED BREAKER Sales last fell in June 2017 when customers held back buying MUMBAI:
Passenger car sales in India fell in August in the first monthly sales drop in more than a year amid devastating floods in Kerala and the high base of the previous year, showed data issued by the companies on Saturday.
The top five carmakers, Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Mahindra and Mahindra Ltd, Tata Motors Ltd and Honda Cars India Ltd, collectively sold 216,211 vehicles, a nearly 1% decline from 218,188 vehicles a year earlier.
Automakers in the country count factory dispatches to dealerships as sales.
While car sales have grown at a healthy pace since November 2017 due to new launches and a recovery in rural demand, they have shown a downtrend for the second straight month. Sales moderated in July due to a high base and planned inventory reduction.
Car sales last fell in June 2017 when customers held back purchases to benefit from lower rates under the goods and services tax (GST) regime, which was implemented from July 1 last year.
The high base in August last year was due to early onset of festive season and buildup of inventory, said Hetal Gandhi, director at Crisil Research.
This year, floods in Kerala affected demand during Onam festival, he said.
Despite introducing a facelift of its mid-sized sedan Ciaz, market leader Maruti Suzuki posted a second straight monthly decline in local car sales (excluding vans and commercial vehicles). Sales fell 3.7% to 132,232 units in August from 137,339 units a year earlier.
Maruti’s sales had fallen 0.69% in July, for the first time since December 2016.
“Sales during the month were adversely affected due to severe floods in Kerala and heavy rains in other parts of the country,” the Suzuki Motor Corp unit said. Kerala contributes about 8% of Maruti’s total retail sales.
Sales of compact cars, which comprise bulk of Maruti’s sales, fell 3.6% on-year to 71,364 units in August. With the exception of July, this segment has recorded more than 20% growth rates since January on strong demand for the new Swift hatchback and Dzire compact sedan, as well as the Baleno premium hatchback.
While sales of entry-level cars, Alto and WagonR grew marginally to 35,895 units during the month, the sport-utility vehicle segment comprising Vitara Brezza and S-Cross models, posted a 16% drop to 17,971 units. Sales of the Ciaz grew 8.4% to 7,002 units in August.
The unfavourable external environment also hit Hyundai as the local unit of the South Korean car maker posted a 2.8% drop in domestic sales to 45,801 units.
Managing director and chief executive YK Koo is however confident of clocking about 9% growth in the festive season spurred with the upcoming launch of a “family car” codenamed AH2, as well as continued demand for the Creta SUV, Verna sedan and Elite i20 hatchback, he said in an emailed statement.
Koo termed Kerala “an extremely important market” accounting for about 6% of Hyundai India’s sales. He expects sales in the state to rebound from January.Mahindra, maker of the Bolero and Scorpio SUVs, posted a 1.8% rise in sales to 19,758 vehicles in August.
Rajan Wadhera, president of Mahindra’s auto sector, said the domestic industry “remained subdued in August with low sentiments” due to external factors. He expects Mahindra’s sales to pick up due to the festive season and the introduction on Monday of its Marazzo multi-purpose vehicle.
Going forward, Gandhi of Crisil expects inventory build-up and sales to take place in September for the upcoming festive season in October and November. Factors such as a rise in rural and urban disposable incomes, driven by broader economic growth, and the implementation of the Seventh Pay Commission, would contribute to the “healthy” growth in car and two-wheeler sales, India Ratings and Research said in a August 31 note.