Auto sales jump in August ahead of festive season

Mumbai: Auto sales expanded at a brisk pace for most firms in August on the back of new models, attractive schemes and larger dispatches ahead of the festive season, show monthly sales data released by companies on 1 September.

Cumulatively, sales at India’s top passenger-vehicle makers advanced 15% in August to 253,007 units, as compared to 216,352 units a year ago.

Maruti Suzuki India Ltd led the pack, riding high on its Vitara Brezza and Baleno models. Sales at the local arm of the Japanese car maker rose 12.2% to 119,931 units. But, faced with increasing competition from the Renault Kwid and an ageing product line-up, Maruti’s entry-level segment continued its downhill trend, falling 5.8% from a year earlier to 35,490 units.

After a gap of five years, passenger-vehicle sales are set for double-digit expansion in the current fiscal year owing to a better-than-expected monsoon, strong buying sentiment and an increase in salaries due to the implementation of the Seventh Pay Commission’s recommendations. The Society of Indian Automobile Manufacturers (Siam), an industry body, on 11 August said that it is likely to revise upwards its earlier forecast of 6-8% growth for the year.

Hyundai Motor India Ltd, the country’s second largest car maker, saw sales in August increase 6.2% to 43,202 units. The company launched the a new generation Elantra last month and hopes to ride on the festive spirit to push its sales.

Rakesh Srivastava, senior vice-president of sales and marketing at the firm, said there is an uptick in overall demand and a new model will have a multiplier effect. He expects the industry to end the year with a growth rate of 15-16%. It will largely be driven by the sport utility vehicle (SUV) segment, which he expects will advance by 42%. Cars, he believes, will advance at a slower pace of 10%.

Sales at utility-vehicle market leader Mahindra and Mahindra Ltd jumped 29% to 18,246 units. Pravin Shah, chief executive and president of the automotive division at the firm, attributed it to a good monsoon as well as new product launches. He said the uncertainty surrounding diesel vehicles had been lifted by the Supreme Court and would further improve sentiment. “The ensuing festive season will give us a further boost,” he added.

The Kwid continued to drive Renault India Pvt. Ltd’s sales, with the firm’s sales jumping to 12,972 units from 1,527 units a year earlier.

According to a Care Ratings report, widespread rain occurred in August, with 30 out of 36 meteorological divisions receiving normal to excess rainfall.

Analysts, too, are optimistic, but warn that rising inflation could play spoiler. “We expect this festive season to be the best in three years due to improvement in rural sentiment,” said Abdul Majeed, partner and national auto practice leader at PricewaterhouseCoopers.

Rising inflation and the expectation that the implementation of the goods and services tax will bring down vehicle prices could lead to postponement of purchases, he added.

Albeit on a low base, other car makers also saw a volume surge—15% at Toyota Kirloskar Motor Pvt. Ltd, 16% at Tata Motors Ltd, 2.6% at Ford India Pvt. Ltd, 6% at Volkswagen Passenger Cars India Pvt. Ltd and 111% at Nissan Motor India Pvt. Ltd.

Honda Cars Ltd was the only firm which saw its sales fall, by 11%, amid strong competition from rival brands.

Meanwhile, most two-wheeler makers reported robust sales as they dispatched more units to dealers in anticipation of a good festive season and improving sentiment in rural India. Auto companies report dispatches to dealers and not end-users.

Sales at market leader Hero MotoCorp Ltd and Honda Motorcycle and Scooter India Pvt. Ltd rose 28% and 25%, respectively. TVS Motor Co. and Yamaha Motor India Ltd, too, reported strong sales growth at 30% and 22%, respectively.

Two-wheeler sales in India had risen a mere 3% in 2015-16 as demand remained sluggish across segments after two bad monsoons.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.