1. Auto sales soar, beat demonetisation blues; Maruti Suzuki jumps 14.1% to 126,220 units

Auto sales soar, beat demonetisation blues; Maruti Suzuki jumps 14.1% to 126,220 units

The auto industry was able to beat the demonetisation dampener with most passenger vehicle manufacturers posting double-digit sales growth in November but the industry is not discounting fears of a slowdown in the days to come as consumer sentiment gets hit.

By: | New Delhi | Published: December 2, 2016 6:39 AM
Maruti Suzuki sharex july sales price rise For larger players the inventory with dealers beginning November was as low as of 2.5 weeks against an average of six weeks Industry executives said that the industry is in a wait and watch mode and December sales will be crucial to gauge whether consumer sentiment has been hit due to demonetisation. (Reuters)

The auto industry was able to beat the demonetisation dampener with most passenger vehicle manufacturers posting double-digit sales growth in November but the industry is not discounting fears of a slowdown in the days to come as consumer sentiment gets hit. Market leader Maruti Suzuki outdid expectations by posting a year-on-year domestic growth of 14.1% to 126,220 units. Barring players like Mahindra and Mahindra and Honda Cars, which posted a decline of 34% and 45%, respectively, others registered a growth in sales.

However, executives said that it is not that the industry is not affected by demonetisation. The good numbers in November are a result of high retail sales during October that reduced inventories with dealers beginning November. This in turn led manufacturers push wholesale sales to dealers during the month reflecting in higher numbers. October retails sales were 15-20% higher than the same month last year. For larger players the inventory with dealers beginning November was as low as of 2.5 weeks against an average of six weeks Industry executives said that the industry is in a wait and watch mode and December sales will be crucial to gauge whether consumer sentiment has been hit due to demonetisation. “December in the last few years has become a month which sees very good sales as companies push in lot of discounts. It needs to be seen how sales fare during the month. If it fails to keep with our expectations then it is a sure sign of consumer sentiment being hit due to demonetisation,” said an executive with a large auto firm.

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Executives said that the first 15 days post-demonetisation were bad with enquiries and bookings coming down.

However, normalcy is slowly returning but the recovery is still not full and it is still early days to come to any conclusion, they said.

“While we expected an improved auto industry performance on the back of the festive season and other positive parameters such as rural demand and interest rates softening, the sudden announcement of demonetisation has brought in an immediate disruption and uncertainty. This has dampened overall sentiments leading to postponed buying, thereby resulting in a major drop in volumes during November,” said Pravin Shah, president and chief executive (automotive), M&M.

“Demonetisation has had its impact on our sales as it has effected customer walk-ins at dealerships, order bookings and timely deliveries. This will pose as a major challenge in the upcoming days as the customers are still dealing with the effects of demonetisation,” said Toyota Kirloskar Motor director and senior vice-president (sales and marketing) N Raja.

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“While we continue to see good demand for our vehicles, the limitation on cash availability due to the recent demonetisation has affected retails in the auto industry, this month,” said Tata Motors president, passenger vehicle business, Mayank Pareek.

“The November month saw major disruptions in the market due to the ongoing effects of demonetisation and cash crunch. Consumer sentiment was low and footfalls and enquiries at the dealerships also slowed down during the month,” Honda Cars India president and CEO Yoichiro Ueno said.

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