Festive season buying lifts auto sales in October

This is the first time in the last seven months that the company has seen an increase in its domestic sales. Despite being in the negative territory, Mahindra & Mahindra managed to arrest a decline in sales, posting an 11 per cent dip at 49,193 units.

Maruti Suzuki India, the largest passenger vehicle manufacturer, posted a growth of 4.5 per cent in its domestic wholesales at 1,44,277 units.

After a prolonged slowdown, automobile firms, including Maruti Suzuki India, Mahindra & Mahindra and Toyota Kirloskar Motor, on Friday reported improved sales in October driven by festive season demand. A series of output cuts, which led to better inventory management by manufacturers, also contributed to improved numbers.

Maruti Suzuki India, the largest passenger vehicle manufacturer, posted a growth of 4.5 per cent in its domestic wholesales at 1,44,277 units.

This is the first time in the last seven months that the company has seen an increase in its domestic sales. Despite being in the negative territory, Mahindra & Mahindra managed to arrest a decline in sales, posting an 11 per cent dip at 49,193 units. In September the company reported a decline of 21 per cent in domestic sales at 40,692 units.

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Overall, passenger vehicles despatches witnessed an estimated decline of around 4 per cent year-on-year (y-o-y) in October, in contrast to over 20 per cent y-o-y dip in monthly volumes for the past one year. Manufacturers said retail demand picked up as the majority of the festivals fell in October including Dhanteras, which accounts for over half of festive sales.

Mahindra & Mahindra and Tata Motors (which also reported double-digit decline in wholesales) said that their retail sales were much better and wholesales do not reflect the actual demand.

Anand Mahindra, chairman, M&M, said the industry needs to switch to reporting retails and not wholesale volumes. “There are some strong signs of life in the market and pipeline stocks have been slashed by controlling billings to dealers,” Mahindra said.

“In October retail sales were the highest in this fiscal recording a 70 per cent increase month-on-month,” said Mayank Pareek, president, passenger vehicles business at Tata Motors.

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Analysts said retail sales showed some signs of recovery in passenger vehicles in October.

Two-wheeler sales, however, failed to pick up in October as volumes declined by around 19.2 per cent y-o-y. As inventory at dealers was the highest in this category, manufacturers produced lesser units. Analysts, however, believe retails improved in October compared to a month earlier.

Commercial vehicle demand continued to remain sluggish with overall sales declining by an estimated 25 per cent y-o-y, the ninth consecutive month of fall. Volumes were down, impacted by plant shutdown by manufacturers including Ashok Leyland and M&M and Tata Motors. In October, while Ashok Leyland’s volumes fell 37 per cent y-o-y, M&M and Tata Motors reported a 3 per cent y-o-y and 34 per cent y-o-y dip in despatches, respectively.