Low consumer sentiment continued to subdue sales performance of the Indian automobile sector in September, as major industry players reported a significant decline in their respective sales figures.
On the flip side, there was some recovery seen in the sales momentum over August 2019, however, market observers said that more time is required for the recent policy measures to kick in and extra incentives for consumers need to be given for the growth trend to re-emerge, according to an IANS
India's automotive industry is the fourth largest in the world, employing more than 35 million people, directly and indirectly, and accounting for nearly half of India's manufacturing output.
The inauspicious Shraddh
period and floods in select regions in the country are also likely to impact sales but inquiries and footfalls increased towards the end of September after heavy discounts and promotional offers
by companies, brokerages said, according to Moneycontrol
.Double-digit decline in vehicle sales
Major automobile makers, including Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors, Toyota and Honda, on Tuesday reported a double-digit decline in domestic passenger vehicle sales in September as the onset of the festive season failed to lift the ongoing slump in the auto industry.
On a year-on-year (YoY) basis, the passenger car market leader-Maruti Suzuki India-reported a 24.4 percent decline in its total vehicle sales, including exports.
A total of 122,640 units, including exports, were sold last month, compared with 162,290 vehicles sold in September 2018. Out of the total sales, domestic sales fell 24.8 percent to 115,452 vehicles.
The auto major's exports last month were recorded at 7,188 units, 17.8 percent lower than 8,740 units exported in September 2018.
Similarly, automobile major Hyundai Motor India (HMIL) reported a decline of 8.1 percent in its overall sales to 57,705 units from 62,757 units sold during September 2018.
The company's domestic sales edged lower by 14.8 percent to 40,705 units from 47,781 units. However, exports went up by 13.5 percent to 17,000 units from 14,976 units shipped abroad in September 2018.
Another automobile major-Tata Motors-reported a 48.02 percent slump in overall September sales to 36,376 vehicles in domestic and international markets compared to 69,991 units sold in the year-ago period.
The company reported a 50 percent decline in domestic sales last month to 32,376 units from 64,598 units sold in September 2018.
In the case of commercial vehicles, the sales declined by 45.4 percent to 28,079 units compared to 51,419 units in the year-ago period.
"With the ongoing subdued demand, we continued our focus on the system stock correction by driving retail and aligning production," Girish Wagh, president, commercial vehicles business unit, Tata Motors, said in a statement on Tuesday.
"Retail sales are estimated to be ahead of wholesale figures by over 16 percent in September and over 27 percent in the second quarter, reducing stock to a six-quarter low. We are monitoring the impact of the relief package announced by the government, and look forward to improved demand from revival in consumption and spend in infrastructure projects," Wagh said.
Besides, the company sold 8,097 passenger vehicles last month, which is a decline of 56 percent over 18,429 units traded during the same period last year.
Mahindra & Mahindra's overall automotive sales went down 21 percent in September 2019 to 43,343 vehicles compared to 55,022 vehicles during September 2018.
The company's domestic sales edged lower by 21 percent to 40,692 units from 51,268 units, while exports went down by 29 percent to 2,651 units from 3,754 units shipped abroad in September 2018.
According to Veejay Ram Nakra, chief of sales and marketing, automotive division, M&M: "We are positive that this festive season, with the onset of Navratra
, will augur well for us and the automotive industry. This, in addition to factors such as good monsoon and the recently announced positive government initiatives, should help revive the industry in the short term."
Toyota Kirloskar Motor's (TKM) domestic sales were at 10,203 units last month as compared to 12,512 units in September 2018, a decline of 18 percent.
Commenting on the sales performance, TKM deputy managing director N Raja said, "The consumer sentiment continued to be subdued in September which has reflected in the sales slowdown in the industry."
Apart from vehicle manufacturers, the sales of two-wheelers were also heavily dented.
Honda Motorcycle & Scooter India's total sales in September 2019 stood at 485,659 units, down from 555,740 units sold during the corresponding month of the previous year.
Hero MotoCorp sold 612,204 units of motorcycles and scooters during the month under review, down from 769,138 units sold during the year-ago period.
"While the market remained tough in September, auto sales saw an uptick from this August 2019 which is a positive sign," Rajesh Goel, senior vice- president and director-sales and marketing, Honda Cars India
, was quoted as saying in The Hindu
On the other hand, Suzuki Motorcycle India registered a YoY sales growth of 2.11 percent to 73,658 units as compared to the 72,134 units off-take in the same period last year.
However, the company expects consumer demand will see the much-needed revival resulting in better retails due to Navratri
and Diwali, Raja added.
Commenting on passenger cars and commercial vehicles segment, Sridhar V, Partner, Grant Thornton India, said: "New introductions have been instrumental in the slight recovery in passenger car sales in September over August, while the YoY numbers indicate the extremely cold nature of the market. The market is yet to see the recovery mode set in."Workers laid off due to sector slowdown
Before suffering the steepening slump in sales, the auto industry provided one of the few bright spots for manufacturing. Its troubles stem in part from banks' and non-banking finance houses' reluctance to extend consumer loans, as well as subdued demand, particularly in the countryside, where two-thirds of Indians live, a Reuters
Automobile sales in India witnessed its sharpest decline in nearly 19 years in July, dropping 18.71 percent, rendering almost 15,000 workers jobless over the past two-three months as the sector reels under a prolonged slump.
Nationwide, according to industry estimates, automakers, component manufacturers and dealers have laid off about 350,000 workers since the start of the year, in response to plunging car sales.
Under pressure from businesses and investors to provide more stimulus, Finance Minister Nirmala Sitharaman had proposed a series of measures last month to help the economy and financial markets but some economists said it would not be enough to revive long-term demand.
On 23 August, foreign investment rules were eased for several sectors, and sources say the government is expected to come up with more measures such as tax cuts for autos and real estate.
"The real revenue growth for auto and consumer goods sectors started declining nearly two years ago. The slowdown has merely gained prominence now," said Arindam Som, analyst at India Ratings, a Fitch group company, adding that he expects auto companies to further cut production.Festive offers
Mahindra and Mahindra (M&M) Managing Director Pawan Goenka said last week that there was a sign of revival in the automobile sector, and the coming festive season will be "decisive".
"The automobile sector was sluggish since the last 12 months. But with the Centre's slew of measures to give a fillip to economy since 6 July, we are seeing the sluggishness giving way to positivity," Goenka told reporters in Indore, a PTI
There was a hope for a revival of the automobile market with the onset of Navratra (Durga Puja)
following good rainfall in large parts of the country and improvement in banks' finances, he said.--With inputs from agencies
Original Source: https://www.firstpost.com/business/auto-sector-slowdown-sales-continue-to-be-on-slow-track-in-september-festive-season-fails-to-cheer-vehicle-industry-7438981.html