Auto sales were a clear washout in November with most manufacturers registering either a year-on-year decline or flattish trend.
Auto sales were a clear washout in November with most manufacturers registering either a year-on-year decline or flattish trend. As per numbers released by a section of manufacturers on Saturday, domestic passenger vehicle sales during the month were down 5% on a y-o-y basis with the country’s largest player, Maruti Suzuki, reporting a 0.3% decline compared to the same month last year. The second-largest car manufacturer, Hyundai Motor, also reported a 0.7% dip in sales.
Passenger vehicle sales, which have been weakening since July, saw its worst during November. The reason being that sales during Diwali (which was in the first week of November) were factored in October numbers.
As a result, in November, consumers were waiting for the heavy discounts offered by dealers to clear calendar year inventories in December. However, this year, manufacturers are staring at a tough time because inventory levels are running very high – close to five-six weeks against a normal of two weeks at November-end. “To clear such high inventory levels, even if discounts offered are very high, it will be a tough task for the industry,” said an industry executive. “Heavy discounting may continue in January also,” the executive added. Speculation is high that industry body Society of Indian Automobile Manufacturers may lower the FY19 growth numbers for passenger vehicles.
During the start of the fiscal, Siam had projected a growth on 9-11% in PVs, which, last month it had said, would be at the lower end of the guidance. However, some industry members are now expecting that the numbers might even be revised downwards. “November was a challenging month for the industry with muted consumer sentiment caused by liquidity crunch, non-availability of retail finance and moderate festive season,” Tata Motors, which saw a decline of 1% in its PV sales.
“We can expect inventory correction from manufacturers during December, which is a strong sales month. It would be interesting to see the level of discounting companies resort to in order to lift sentiment,” said Gaurav Vangaal, senior analyst, IHS Markit. PV sales were robust in the first quarter of the current fiscal, growing at 20% y-o-y. But it was followed by a quarter of de-growth in sales volume due to floods in Kerala during Onam, mandatory long-term insurance and rising fuel prices. Sales went down 2.71% y-o-y, 2.46% y-o-y and 5.61% y-o-y during July, August and September,