1. Cars, bike sales soar but this group is totally unimpressed with good news

Cars, bike sales soar but this group is totally unimpressed with good news

Festival months of September and October are proving nothing short of a bonanza for carmakers when compared to the month-long festive season in 2016.

By: | Mumbai | Published: October 5, 2017 5:36 AM
automobile sector, car sales, bike sales, festive season impact on auto sector Brushing aside the lull in offtake following implementation of the goods and services tax (GST) or the unexpected revision in the cess rates on bigger cars, motown has managed to post bumper sales in the first leg of festivities. (Reuters)

Festival months of September and October are proving nothing short of a bonanza for carmakers when compared to the month-long festive season in 2016. Brushing aside the lull in offtake following implementation of the goods and services tax (GST) or the unexpected revision in the cess rates on bigger cars, motown has managed to post bumper sales in the first leg of festivities. However, apprehension remains over continuation of such a buying momentum.

From commercial vehicle maker Ashok Leyland to two-wheeler major TVS Motor, most automakers have posted double-digit growth in year-on-year sales during September. As retail sales picked up pace for the first time after the roll-out of the GST, both Hyundai and Hero MotoCorp reported their best-ever monthly sales performance. In fact, Hero MotoCorp and Honda Motorcycle and Scooter India (HMSI) said their retail sales crossed the one-million mark in the festive season alone.

According to analysts at Nomura, most two-wheeler makers have witnessed strong double-digit retail growth. This was mainly led by festival discounts. An analysts said, “Hero MotoCorp is offering `3,000 discount on scooters while Bajaj Auto is offering `1,000-2,100 discount for commuter segment bikes. In addition, there is `1,500 discount for government employees by HMSI and HMCL.”

This perhaps explains why Pune-based two-wheeler giant Bajaj Auto, which has been posting negative volumes growth month after month since the government banned high denomination currencies in India, finally posted a 7% year-on-year growth in volumes in September.

While carmakers are on overdrive wheeling in the moolah during the festival months, analysts point to a danger of muted demand in days to come. “Festive season has started off well with strong sales momentum seen during Navratri festival. However, we caution that economic growth is weak and auto sales momentum may fizzle out post the demand spurt during festive season,” say analysts at Kotak Institutional Equities.

Commenting on the impact on the hinterland, analysts at JM Financial say though there are signs of normalisation of demand in rural markets for the first time after demonetisation, the outlook for such areas during the year may not be the same. According to Nomura, motorcycle wholesale volumes are likely to be affected in the second half of the fiscal by the 5% monsoon deficit and the uneven distribution of rainfall in the country.

According to ICRA, tractor volumes are expected to soften due to “an adverse impact on farm cash flows due to an uneven rainfall precipitation in the ongoing southwest monsoon.”

However, analysts at Nomura feel that medium and heavy commercial vehicles will continue to witness healthy wholesale volumes. “We believe implementation of the E-way bill (GST-based electronic system) from this month will make overloading more difficult. Thus, we have factored in a 9% growth in second half of FY18, compared with -6% in first half of FY18 despite weaker economic growth,” they said.

  1. V
    vishal
    Oct 27, 2017 at 4:24 pm
    Don't buy Car Bike before New Year 2018 : Now you Can get only 2000 to 4500 thousand on bike and on car will get 25000 to 125000 rupee discount or cheaper,It is only impact GST tax system on existing manufactured product but if you buy after New Year 2018 you can get more discount or cheaper because GST tax system will apply on previous tax system as well as used raw material for manufacture bike or car . For example if you buy any scooter for 64000/- before GST and after GST it is selling 600000-610000 (GST TAX implement of existing tax) then think if GST will apply on raw material of manufacturing same scooter then it will get 52000-55000/- only. Share it into your friend circle and add your opinion for who is buying before New Year 2018.
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