Auto slide continues in August, but revival steps offer hope

NEW DELHI: Sales of passenger vehicles fell further last month, maintaining the downward trend, with high vehicle ownership costs amid an overall slump affecting consumer sentiment adversely. Industry executives expressed the hope that recent stimulus measures announced by the government, some aimed specifically at the auto industry, will help revive sales during the upcoming festive season.The country’s largest carmaker Maruti Suzuki posted a 35.9% decline in domestic sales to 94,728 units in August. Mahindra & Mahindra (M&M) saw volumes drop 32% to 13,507 units. At Honda Cars India, sales crashed 51.3% to 8,291 units. Automakers in India report dispatches from factories and not retail sales to customers.“Auto industry continues to be subdued in August due to several external factors,” said Veejay Ram Nakra, chief of sales and marketing, automotive division, M&M.Special Offers for Festive SeasonHigher insurance expenses and enhanced safety and emission norms have raised prices by around 10% in the past one year.The liquidity squeeze on nonbanking finance companies (NBFCs) added to the reluctance of consumers to acquire new cars.70941175 Severe floods in several states also hurt demand, said N Raja, deputy managing director, Toyota Kirloskar Motor (TKM). Toyota Kirloskar Motor saw sales slide 24% to 10,701units in August.“The auto sector continues to witness high de-growth due to poor consumer sentiment. This is despite the high discounts prevailing in the market, which makes it the best time to buy cars,” said Rajesh Goel, senior vice president and director, sales and marketing, Honda Cars India.At Maruti Suzuki, while sales of mini cars Alto and old WagonR dropped 71.8% to 10,123 units, those of compact cars (Baleno, Celerio, Swift, DZire, Ignis, new WagonR) declined 23.9% to 54,274 units. Wholesale volumes of midsize sedan Ciaz went down 77.2% to 1,596 units. Only the utility vehicle segment registered an increase with sales of Ertiga, Vitara Brezza and SCross going up by 3.1% to 18,522 units. Sales of light commercial vehicle Super Carry fell 13.9% to 1,555 units.Automakers are hoping the series of measures announced by the government to ease liquidity in the market and boost auto sales late last month will help revive demand in the upcoming festive season.“We hope the recent measures taken by the government will help in improving consumer sentiment and demand creation as we move forward,” Goel said. “With the impending festive season, the sales are likely to pick up in coming months.”The steps announced by finance minister Nirmala Sitharaman on August 23 include extending cheaper car loans, improving liquidity through credit expansion to public sector banks, deferment of one-time registration fees, higher depreciation for all vehicles and lifting the ban on purchase of new vehicles by government departments to spur demand.“We are optimistic and hopeful of a good festive season going ahead,” Nakra said.At Tata Motors, sales of passenger vehicles dipped 58% to 7,316 units last month. Tata Motors president, passenger vehicle business unit, Mayank Pareek said the company’s retail sales increased 42% which helped reduce inventory levels and prepare dealers for the festive season.“Marking the onset of the festive season, we will drive positive sentiments with special offers and several special editions...We are hopeful that the recently announced financial package by finance minister will help in improving the liquidity of market and reducing the ownership cost. This will certainly help the industry to revive and drive the growth,” Pareek said.Sales of farm equipment at M&M dropped 15% to 13,871 units.Monsoon boost“The improved monsoon spread and sowing pattern for the kharif crop is likely to help boost rural sentiment going into the festive season,” said Rajesh Jejurikar, president, farm equipment sector, M&M. “The recently announced fiscal measures by the government may also provide the necessary stimulus for tractor demand uptick.”Commercial vehicle sales of Tata Motors declined 45% to 21,824 units.“Subdued demand sentiment due to poor freight availability, lower freight rates and general slowdown in economy continued to hamper the commercial vehicle demand,” said Girish Wagh, president, commercial vehicles unit of Tata Motors.“System stock reduction through retail focus and aligning production will continue to be our approach, while cautiously monitoring the market in these challenging times. As a result, retail sales are estimated to be ahead of wholesale by over 25% in August. We are looking forward to a positive impact of the recently announced stimulus package by the government,” Wagh said.

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