Festive season brings cheer for auto, consumer durables

Automakers see higher month-on-month sales in October aided by discounts; consumers buy more washing machines, refrigerators and TVs

Festive season this year did bring in some cheer for the auto sector which saw some positive demand after months of falling sales.

However, the “cautiously optimistic” industry is in a wait-and-watch mode on whether the positive trend of last month signals a turnaround for the sector or if higher sales were merely due to festive fervour.

In October, market leader Maruti Suzuki posted positive domestic sales for the first time in seven months, witnessing a growth of 2.3% in wholesales of passenger vehicles at about 1.41 lakh units from the same month a year-ago.

Sequentially, the company’s sales in the segment grew almost 26% from about 1.1 lakh units in September 2019.

The company’s executive director (marketing and sales) Shashank Srivastava told The Hindu that while festive sales had been good, Maruti Suzuki is “cautiously optimistic” about the future and more clarity should emerge by the end of the current financial year.

“Sentiment has changed, but its difficult to tell how much of this is permanent and how much related to just the festive season,” he said.

Mr. Srivastava added that they would have to watch the situation for another couple of months to arrive at a conclusion about the turnaround because some of the things which were impacting the market such as cost of car ownership, high taxes, high insurance costs, conversion from BS IV to BS VI and liquidity crunch continue to exist.

Asked if high discounts would continue, Mr. Srivastava said that it would depend on market conditions. However, “I think in November also, discounts level will be pretty high because we have to be confident about the general market before making changes.”

Hyundai up 23% MoM

Hyundai’s sales declined 4% year-on-year but was up 23% on a sequential basis. Honda saw its sales pick up by 11% month-on-month though compared to October last year, it was down 29%.

Rajesh Goel, senior vice- president and director-sales and marketing, Honda Cars India Ltd., said, “The festive season was rewarding for the auto sector after a prolonged slowdown. The high discounts and other festive offers provided by automakers across the industry resulted in positive consumer sentiment.”

Tata Motors also saw its domestic passenger vehicle sales rise in October compared to September; in comparison with October 2018 though, it was lower.

Festive season brings cheer for auto, consumer durables

 

Mayank Pareek, president, passenger vehicles business unit of the firm, said their focus was on retail, as a result retail sales were up 36% more than wholesales.

“In October, retail sales were the highest in this fiscal, recording a 70% increase month-on-month.”

He expressed confidence that the positive sentiments of the festive season will lead to a structural recovery in the market.

“The festive month of October was excellent for Mahindra, with retail volume exceeding wholesales by approximately 40%. This robust retail performance was contributed by both passenger and commercial vehicles,” said chief of sales and marketing, automotive division, Veejay Ram Nakra.

For Toyota Kirloskar Motor, domestic sales y-o-y were down 6% to 11,866 units, while new entrant MG Motor India posted retail sales of 3,536 units of its SUV Hector in October.

Hero retail sales surge

Market leader Hero MotoCorp said it posted the highest-ever retail sales during the festive period, selling 12.84 lakh units in October 2019. On wholesale basis, the company sold 5,99,248 units of motorcycles and scooters, as against 7,34,668 units in the same month last year due to the company’s “conscious efforts at further correcting dealer inventories.”

Sanjay Bhan, head, sales, aftersales and parts, Hero MotoCorp said, markets such as Uttar Pradesh and Chhattisgarh saw over 15% retail growth.

“We are optimistic of carrying forward the momentum in retail sales. Thanks to the record retail offtake, our inventory levels are now down to 30 days and future despatches are being planned in keeping with market demand.”

For Bajaj Auto, domestic sales were down 13% to over 2.78 lakh units as against about 3.19 lakh units in October last year.

For the previous month, sales stood at about 2.15 lakh units. Similarly, TVS Motor Company reported an uptrend in sales. The company said it has significantly rationalised BS IV stocks for the transition to BS VI.

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