Amid “short-term headwinds” in the auto industry post-demonetisation, auto majors such as Hyundai Motor India and Mahindra & Mahindra posted a decline in their domestic sales in December 2016. On the other hand, Tata Motors, Volkswagen and Renault had registered a growth in sales during the last month.
Analysts are in a wait and watch mode for the last quarter of 2015-16 as some feel that the retail impact of demonetisation on car sales will be reflected in the January-March period. However, the impact can be mitigated to some extent by the positive consumer sentiment, particularly if some sops are announced in the Budget.
Market leader Maruti Suzuki had said on Saturday that domestic sales had fallen 4.4 per cent to 1,06,414 units in last month from 1,11,333 units in December 2015, the company said. “While retail demand for our products was strong, our wholesale (numbers) in December are as per plans made at the start of the year,” the company’s Executive Director (Marketing & Sales) R.S. Kalsi said.
Hyundai Motor India said its domestic sales fell 4.3 per cent in December to 40,057 units from 41,861 units in the same month previous year. For Ford India, domestic sales declined by 6.04 per cent to 5,566 units.
‘Uncertainty abounds’
“As we move in 2017, the industry does face some short-term headwinds, given the uncertainty regarding the impact of demonetisation and GST, while the medium to long-term outlook continues to be positive,” Anurag Mehrotra, Executive Director, Marketing, Sales & Service at Ford India said. Mahindra & Mahindra’s sales were down 1.5 per cent to 34,310 units. “The auto industry continues to go through challenging times, grappling with the short-term effects of demonetisation as well as reduced and postponed purchase decisions. However, we believe there will be a gradual pick-up in demand starting next few months,” M&M Chief Executive (auto division) Pravin Shah said, adding that implementation of GST along with some right initiatives taken by the government in the upcoming Union Budget will provide a veritable boost to the auto industry and the economy in general.
Tata Motors said domestic sales of its commercial and passenger vehicles grew by one per cent to 35,825 units in December 2016. It added that passenger vehicle sales in grew 35 per cent to 10,827 units last month year-on-year, while car sales grew by 40 per cent “due to strong demand for the Tata Tiago.”
Mayank Pareek, President, Passenger Vehicle Business at Tata Motors said, “We continued our growth momentum in December on the back of robust sales, led by positive response for the Tata Tiago. This has resulted in planned stock reduction in the network. We also saw good traction on retail sales towards the end of the month.”
Renault India sold 11,244 units in December 2016, a growth of 9.2 per cent against 10,292 units in the same month last year, while Volkswagen sold 4,348 cars in India against 2,577 units.
Nissan India sold 3,711 units, a 21 per cent increase year-on-year. Arun Malhotra, Managing Director, Nissan Motor India said, “Nissan India achieved healthy sales in December by posting 21 per cent year-on-year growth despite the challenges of the demonetisation issue.”“The inventory planning is done much in advance by the car manufacturers. A company cannot deviate from the inventory flow suddenly.
“The sales reflect existing supply chain in the work. Retail impact, which will be short-term, may be seen in January-March quarter,” according to Amit Kaushik, Managing Director (India) at auto consultancy firm Urban Science.
He stressed that the impact will be short-term as the consumer sentiment remains positive. “The sector can further get a boost if some sops are announced in the upcoming budget,” he said.
In the two-wheeler segment, Bajaj Auto reported 11 per cent dip in domestic motorcycles sales at 1,06,665 units, while India Yamaha Motor reported a 28 per cent increase in sales to 49,775 units.
Royal Enfield posted 41 per cent increase in its domestic sales at 56,316 units.
