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  1. Post-GST, auto companies report strong sales in July

Post-GST, auto companies report strong sales in July

Maruti Suzuki posted its best-ever volume growth at 154,001 units in the domestic market in July

By: | New Delhi | Updated: August 2, 2017 7:19 AM
The country’s largest car manufacturer, Maruti Suzuki posted its best-ever volume growth at 154,001 units in the domestic market in July, an increase of 22.4% compared to the same period last year. (PTI)

After posting disastrous sales in June – the lowest since March 2013– due to destocking ahead of GST, automobile companies posted bumper sales in the month of July with most of them registering year-on-year double digit growth in sales of passenger vehicles. In a complete reversal of trend thus far even medium and heavy commercial vehicle sales grew during the month with manufacturers dispatching and dealers stocking as they feel fleet owners will enhance purchase in the coming months due to good monsoon and drop in vehicle prices after the roll out of the new tax regime.

The country’s largest car manufacturer, Maruti Suzuki posted its best-ever volume growth at 154,001 units in the domestic market in July, an increase of 22.4% compared to the same period last year. In June Maruti had posted a growth of mere 1% in the absence of nil wholesale dispatches due to destocking ahead of GST.With most inventory cleared with dealers by end-June, auto firms resumed dispatches in July which saw sales rise during the month. However, retail sales weren’t as good as wholesale dispatches during the month as dealers did not have enough stock for the first 7-10 days of the month. Another reason for not very strong retail sales during the month was also because lot of purchases by consumers were advanced and made in June to avail huge discounts companies were offering to clear their stock before the roll out of GST.

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Industry sources said that with festival season kicking in towards the end of the current month, dispatches would continue to be high in the next few months thus keeping wholesale sales growth high, though it might moderate from the levels recorded in July. A clean slate at dealers end also saw Maruti posting a double digit growth (21%) for its mini segment vehicles comprising Alto and WagonR, which otherwise for most part in FY17 (8 out of 12 months) had seen decline in sales. Maruti’s closest competitor and the second largest car manufacturer, Hyundai Motor saw its domestic sales growing to 43,007 units, up 4.4%. Slower volume growth of Hyundai is largely because of high base effect and also because Hyundai’s hot selling vehicles like compact SUV Creta and premium hatchback i20 are now more than two years old in the market. Unlike Maruti it has not launched newer vehicles in the market of late.

Together, Maruti and Hyundai command around 67% market share in the passenger vehicle market. Other players like Honda Cars and Tata Motors also posted double digit growth at 22% and 10% respectively. Mahindra and Mahindra reported a 20% increase in sales to 19,152 units for the first time in the current fiscal. In a complete reversal of trend, commercial vehicle sales also witnessed growth during July. For the first time after several months volumes in the medium and heavy commercial vehicles increased. Tata Motors, which has around 49% market share in the MHCV segment saw its overall MHCV sales increase by 10%. The other major CV manufacturer, Ashok Leyland also registered a 10% growth in MHCV sales.

Volumes in the two wheeler segment, especially in motorcycles continued to recover on the back of recovery in the demand in rural and semi urban markets. Hero Moto Corp reported a 17.1% jump in volumes to 623,269 units, while Chennai-based TVS motors also saw domestic volumes jump by 6.2% y-o-y to 219,396 units.

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