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Maruti’s April sales drop worst in seven years, Hyundai’s skids 10%

Maruti’s April sales drop worst in seven years, Hyundai’s skids 10%

Sales at India’s top two manufacturers of passenger vehicles (PVs) fell sharply in April over the same month a year ago as the companies curtailed dispatches to dealers amid weak buyer sentiment and slowing sales.

While Suzuki’s PV sales in the domestic market dropped 19.6 per cent in April, for Hyundai the fall was 10 per cent over last year, the companies said in a statement on Wednesday.

Auto are bracing for tougher months ahead as stricter regulations and tepid sentiment are likely to affect sales.

During the month, Maruti delivered 131,385 units to its dealers against 163,434 units in the same month last year.

The decline — the sharpest in seven years — came as buyers deferred purchase amid the increased cost of finance and ownership. Auto companies in India count dispatches to dealers as sales.

Hyundai Motor India sold 42,005 units during the month against 46,735 units a year ago.

Maruti's April sales skid most in seven years, Hyundai reports 10% dip

Honda bucked the slowing trend. Sales at the maker of the City and models grew 23.2 per cent to 11,272 units during the month over a year ago.

Rajesh Goel, senior vice-president and director, sales and marketing, Honda, attributed the growth to a lower base effect because there was no Amaze in the corresponding month last year during the model run-out.

“The elections and overall subdued market sentiment are affecting sales. The industry is heading towards a tougher year due to volatility in fuel prices, increase in car prices owing to new regulations, and a stricter inventory control for a smooth switch-over to the BS VI regime by the year end,” said Goel.

The sales decline at Maruti was led by a 13.9 per cent fall in the company’s compact car models, including the new Wagon R, Swift, Celerio, Ignis, Baleno and Dzire models. One in every two passenger vehicles sold by Maruti is a compact car.

“Maruti’s volumes are surprisingly low,” said Mitul Shah, vice-president, research, Reliance Securities, adding it indicated a broad-based slowdown in all the segments across the PV market.

He expects Maruti to outperform its rivals. “There are indications of a high double-digit fall in sales for most of the other manufacturers,” he said. Shah expects the slowdown to continue in the months ahead.

Sales of mini cars, comprising the Alto and old Wagon R (now discontinued), also decreased 39.8 per cent over the last year. The mid-sized sedan Ciaz too saw sales skid 45.5 per cent over the last year, the company said.

The maker of the bestseller Baleno and Brezza has guided for a muted fiscal year owing to the disruption expected due to a switch to stricter emission norms, which take effect on April 1, 2020.

Maruti expects 5-8 per cent growth for the full year, one of the lowest in several years.

“There are unfavourable factors that might impact growth in the next financial year. There is a downturn in the overall industry, uncertainty over petrol prices (due to the embargo on Iran), and a shift to the BS VI model, due to which prices will go up. However, there are favourable indications too,” Chairman R C Bhargava told reporters after the company’s fourth-quarter earnings.

Maruti’s forecast is still higher than that of Society of Indian Automobile Manufacturers (Siam). Siam has forecast 3-5 per cent growth for the PV market for this financial year.

The muted growth forecast was predicated on slowing sales in the past few months. in India advanced by a mere 2.7 per cent in March, the slowest in five years, as a higher cost of ownership including interest rates, increased premium outflow on insurance, among other factors, deterred buyers.

Sales have been slowing owing to the ongoing Lok Sabha elections.

The auto market is expected to remain in the slow lane till the elections end. Auto firms are hoping for a rebound in sales if there is a stable government at the Centre.

Subrata Ray, analyst at Icra Ratings, attributes the slowdown in the PV market to the high base of last year. “In last year’s quarter, one had a very strong set of numbers. That apart, being election months, the numbers are expected to be subdued,” said Ray.

The World Bank estimates India’s economic growth to see a moderate acceleration to 7.5 per cent in FY20.

source:business-standard.com

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