Early Diwali takes away automakers’ festive season cheer, only single-digit growth reported

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New Delhi/mumbai | Updated: November 2, 2017 6:51:29 AM

Automobile manufacturers reported muted sales in October with most companies clocking single-digit growth. The festival of Diwali, usually a busy time for carmarkers, saw less activity this time around.

Early Diwali, automakers' festive season, single-digit growth, Carmakers, Automobile manufacturers Automobile manufacturers reported muted sales in October with most companies clocking single-digit growth. (Representative Image: Reuters)

Automobile manufacturers reported muted sales in October with most companies clocking single-digit growth. The festival of Diwali, usually a busy time for carmarkers, saw less activity this time around. Carmakers have been posting high double-digit growth since July when the process of restocking began after GST destocking in June. Company executives pointed out, however, the combined sales for September and October were reasonably good. The country’s largest passenger vehicle manufacturer, Maruti Suzuki, for instance, saw sales in September grow 9.9% y-o-y to 136,000 units. The combined sales for September and October showed a much better growth of of 13% y-o-y. Barring Diwali, other festivals were in September this year when the industry posted a growth of 11.31% (y-o-y) in sales of passenger vehicles. The reason for muted sales in October — the top six PV manufacturers saw their combined sales grow by only 4% — apart from the high base effect was that following high despatches by manufacturers in September, despatches in October remained flat. Still, sources said retail sales moved in tandem with wholesale despatches because for Maruti, for example, the inventory levels with dealers were of three weeks, which is seen as low compared with the normal levels of six weeks.

Maruti Suzuki, which saw a sales growth of around 17% in the first half of the current fiscal, is unlikely to see this level of growth in the second half, but as its chairman RC Bhargava recently indicated that it will still post double-digit growth. Segment-wise, Maruti once again saw its sales being driven by its newer vehicles like Baleno, Ignis, Dzire, and Brezza. The compact vehicles under which Baleno, Ignis, and Dzire come posted a growth of 25% during the month while utility vehicles under which Brezza comes recorded a growth of 30%. Entry level vehicles like Alto and WagonR saw sales declining by 4.2%.

The second-largest PV manufacturer, Hyundai Motor, saw its sales declining marginally (0.8%) during the month at 49,588 units. Mahindra and Mahindra reported 6% y-o-y decline because of the high base impact and new products not generating enough demand. M&M president (automotive sector) Rajan Wadhera said, “The auto industry has had a mixed month. The build-up to Dhanteras and Diwali was good but the demand tapered off subsequently.” He cautioned that going forward the auto industry would enter into a year-end period of lower sales. Tata Motors registered a 1% y-o-y increase in volumes to 16,475 units. “While we have grown, we could have done better had it not been for the long holiday season. We will maintain cautious optimism in the market and hope to see this momentum continue,” Tata Motors president, passenger vehicles business unit Mayank Pareek said.

In the M&HCV segment, Tata Motors reported an 8% increase in volumes to 11,391 units as result of the increasing popularity of the new technology it adopted for the BS-IV vehicles. On the other hand, Ashok Leyland’s supplies of vehicles declined by 5% y-o-y to 9,110 units during the month. Sales of Honda Motorcycles and Scooters (HMSI) decreased by 7% y-o-y to 4,37,531 units, while the same for TVS Motor stayed flat at 2,70,372 units in October. “The increased production capacity by 50,000 units per month ahead of the festival coupled with rapid network expansion, availability of models up to last mile network and 360 degree marketing push resulted in record festive retails,” said Yadvinder Singh Guleria, senior vice president – sales & marketing, Honda Motorcycle & Scooter India.

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