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  1. Auto sales surge on low base

Auto sales surge on low base

Auto sales in June witnessed a strong surge, largely due to a low base in June 2017 as manufacturers had made smaller dispatches to dealers days ahead of the GST rollout.

By: | New Delhi | Published: July 3, 2018 5:09 AM
auto, auto sector, auto industry For the April-June quarter, the four PV manufacturers under review grew at 22% over Q1FY18.

Auto sales in June witnessed a strong surge, largely due to a low base in June 2017 as manufacturers had made smaller dispatches to dealers days ahead of the GST rollout. High sales (which are wholesale numbers) were reflected across segments, especially passengers cars and commercial vehicles.

In the PVs segment, top four carmakers grew by around 35% Y-o-Y in June. The performance was led by Maruti Suzuki, which recorded a 44% increase in domestic sales due to high demand for its Swift, Baleno and Dzire models.

Tata Motors’ Tiago and Nexon were popular with carbuyers as the automaker posted over 38% jump in sales volume.

Hyundai India and M&M registered 21% and 12% growth, respectively, in their June sales due to a low base last year.

PV sales for Hyundai, M&M and Tata Motors had shrunk between 5% and 12% in June 2017, while market leader Maruti Suzuki grew by just 1% due to reduction in units sent to retail outlets.

Analysts expect the high growth to continue in coming months with GST after-effects keeping the base low.

“We were on the cusp of the GST in June 2017. The companies specifically focussed on de-stocking, which led to a high growth this year. A similar growth is expected in the next two months. Only after that, the base will normalise. Having said that, the domestic auto sector is continuing with the strong momentum,” Sridhar V, partner and practice leader, Grant Thornton, said.

In the two-wheelers category, Bajaj Auto’s sales number was boosted by a low base in June 2017. The company recorded an 86% rise in its monthly sales figure as it had undertaken a massive de-stocking exercise ahead of the GST rollout. Similarly, Honda Two-wheelers posted a 28% Y-o-Y rise in domestic sales last month.

On the other hand, Hero Motocorp and TVS Motor did not witness similar de-stocking in June 2017. Hero Motocorp grew by 13% in June, while TVS’ sales rose by 8% Y-o-Y. “With monsoon already hitting many parts of the country, the positive consumption pattern is expected to continue in coming months,” Hero said.

Tata Motors, M&M and Ashok Leyland drove the commercial vehicles segment with increase in sales ranging from 27% to 50% for June. Girish Wagh, president, commercial vehicle business unit, Tata Motors, credited positive economic indicators for this growth. “Our commercial vehicles domestic business reported an increase of 50% on the back of the economy continuing to show an uptick due to the improved industrial activity, robust private consumption and government spending on infrastructure,” Wagh said.

For the April-June quarter, the four PV manufacturers under review grew at 22% over Q1FY18. The segment had witnessed just 4.5% growth in Q1FY18 owing to the GST introduction. Similarly, the CV segment sales jumped by 50% in Q1FY19, against 9% shrinking of market in the same quarter last year.

For two wheelers, the near-17% growth in the first quarter of FY19 was in line with the industry estimate. This segment saw an 8% growth in Q1FY18.

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