Slide in auto sales continues in September, but better than Augusthttps://indianexpress.com/article/business/economy/slide-in-auto-sales-continues-in-september-but-better-than-august-6046458/

Slide in auto sales continues in September, but better than August

While Maruti Suzuki reported a 27% drop in domestic car sales at 1.1 lakh units, Bajaj Auto saw a 35% drop in motorcycles at 1.77 lakh units.

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What started as a problem of funding and liquidity squeeze for the industry and its consumers in July-August 2018, has now become more of a sentiment issue with individuals looking to postpone and cut down on consumption expenditure.

SALES of vehicles across segments in the automobile sector continued their slide in September with leading manufacturers of passenger vehicles, two-wheelers and medium and heavy commercial vehicles, reporting a sharp fall compared with the same month last year. September’s sales were, however, better than the previous month, providing some relief to auto companies.

While Maruti Suzuki reported a 27% drop in domestic car sales at 1.1 lakh units, Bajaj Auto saw a 35% drop in motorcycles at 1.77 lakh units. Ashok Leyland announced sale of 4,035 units of medium and heavy commercial vehicles in September, a sharp 69% decline compared with September 2018.

Explained | Another month of falling car sales — why the situation is not improving

Among other passenger vehicle manufacturers, while Hyundai Motor India reported a 14.8% drop in sales in September at 40,705 units, sales of Honda Cars India witnessed a 37% decline in sales to 9,301 units last month. Toyota Kirloskar’s car sales witnessed a 18.5% drop year-on-year at 10,203 units last month.

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Honda2Wheelers India, the second-largest two-wheeler manufacturer in the country also reported a 12.5% drop in domestic sales to 4.55 lakh units this September.

For Maruti Suzuki, which is the industry leader in the mini and compact vehicle segment witnessed a 29% drop in sale, while the mid sized car segment (Ciaz) witnessed a 72.5% decline in sales over the same period last year. The utility vehicle segment for Maruti Suzuki stood stable with a marginal 0.5% decline in sales last month.

Explained

Festival sales hold out hope

Facing decline in sales in 14 of the last 15 months, the industry has now pinned its hope on the festive season. It, however, remains to be seen if government measures to revive sentiment has any bearing on lifting consumption demand.

What started as a problem of funding and liquidity squeeze for the industry and its consumers in July-August 2018, has now become more of a sentiment issue with individuals looking to postpone and cut down on consumption expenditure. With GDP growth rate slowing down to 5% in the first quarter ended June 2019, and wage growth not keeping pace with expectations, economists and market experts say people are looking to defer their large expenses.

Suffering weak demand, the industry is now pinning its hope on the festive season. Commenting on the sales performance, N.Raja, deputy MD, TKM said, “The consumer sentiment continued to be subdued in September which has reflected in the sales slowdown in the industry.” He further said that “the company expects consumer demand will see the much needed revival resulting in better retails due to Navratri and Diwali.”

Some players see an uptick in September sales over August sales as a silver lining. Commenting on the industry sales, Rajesh Goel, Sr VP and Director – sales and marketing, Honda Cars India said, “While the market remained tough in September, the auto sales saw an uptick from this Aug’19 which is a positive sign. We hope the consumer sentiment further improves during the ongoing festive season and helps the sales momentum.”

While many are pinning their hopes on account of Navratri and Diwali, some are not as optimistic. “Besides the general weak consumer sentiment, customers also postponed their vehicle purchase decision on account of expectations of cut in GST rates (till the September 20 meeting) and also in the hopes of bigger discount in the festive season and also between January and March 2020 ahead of the transition from BSIV to BSVI,” said a senior official with a leading car manufacturer.

As companies have failed to generate demand despite heavy discounts, many within the industry are sceptical about a revival in sales in the immediate future.