High discounts and launch of new variants notwithstanding, auto sales across segments continued to disappoint in September, with passenger vehicle (PV) despatches (from manufacturers to dealers) falling 29% year-on-year. This is yet another sharp decline in over two decades, however, better than August when despatches had declined 32%, the highest since 1997-98 when the Society of Indian Automobile Manufacturers (Siam) started collating monthly sales figures.
Along expected lines, the country’s top five PV makers — Maruti Suzuki, Hyundai, Tata Motors, Mahindra and Mahindra, and Toyota — once again reported double-digit decline. This was the 11th consecutive month of decline in volumes.
Even as Maruti’s domestic sales volumes fell 24.8% y-o-y, on a month-on-month basis despatches rose around 18%.
Analysts said inventory continues to remain high, particularly for two-wheelers and heavy commercial vehicles. “Our channel checks suggest relatively weak demand in the first phase of the festive season. Manufacturers will have to discount aggressively and reduce dispatches to bring inventory under control,” analysts at Jefferies said.
Two-wheeler sales slipped by around 22% y-o-y in September — the 11th consecutive month of decline. According to Federation of Automobile Dealers Association (Fada), inventory in most parts of the country is over 50 days, much higher than the normal 25-30 days. While Hero MotoCorp and Honda Motorcycle posted 20.4% and 12% y-o-y drop in September sales, respectively. Bajaj Auto and TVS Motor Company reported an over 30% y-o-y dip in despatches.
The worst hit was the commercial vehicles segment, which fell by around 42% y-o-y, primarily impacted by the plant shutdowns of manufacturers, including Ashok Leyland, M&M and Tata Motors, to control high inventory. Experts believe liquidity crunch in the NBFC sector and the revised axle load norms continue to impact demand.
Girish Wagh, president, CV business at Tata Motors, said, with the ongoing subdued demand, the company focussed on system stock correction by driving retail and aligning production. “Retail sales are estimated to be ahead of wholesale by over 16% in September and over 27% in Q2, reducing the overall stock level to the lowest for the last six quarters,” Wagh said.
Given that retails improved slightly in September, industry executives are hopeful the festive season demand in October will be comparatively better, given that discounts are at an all-time high. Rajesh Goel, senior VP and director — sales and marketing, Honda Cars India, said, while the market remained tough in September, auto sales saw an uptick from August, which is a positive sign. “We hope the consumer sentiment further improves during the ongoing festive season and helps the sales momentum,” Goel said.
N Raja, deputy MD at Toyota Kirloskar Motor, said the consumer sentiment continued to be subdued in September which has reflected in the sales slowdown in the industry. “Thanks to the Navratri and Diwali festive sparkle around, we expect the consumer demand will see the much needed revival resulting in better retails,” Raja said.